Canada’s market for initial public offerings stalled in second-quarter 2012, says PwC’s quarterly survey of Canadian equity markets.
In the past few months, only two new issues – both real estate trusts with a total value of $185 million – were introduced on the TSX.
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The 32 new issues on all Canadian exchanges in the first half of 2012 generated $220 million in new equity, a significant drop from the $1.4 billion value of the 34 IPOs in the first half of last year.
The European debt crisis, soft commodity prices globally, and the resultant market volatility conspired to keep both issuers and investors on the sidelines, says Dean Braunsteiner, PwC national IPO services leader.
Likewise, the controversial Facebook IPO in the U.S. failed to ignite interest in the technology sector, as the group predicted in its last survey.
“The interest in REITs is testimony to the enduring appeal of the yields from real estate, and the single bright spot in the second quarter,” Braunsteiner adds. “But, sagging commodity prices and the recent slide in the price of oil have made it very difficult for companies in to plan new issues. Caution will be the watchword for the next few months.”
A related PwC survey looking at U.S. equity markets also shows a sharp decline in IPO activity at the end of the second quarter. “While the U.S. market slowed abruptly at the end of the quarter, that hasn’t dimmed optimism there,” Braunsteiner says.
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He concludes, “There are still some significant IPOs in the pipeline in the U.S. The challenge for them and for the new issues we see coming in Canada, will be timing.”