2016 worst year for Canadian IPOs

A handful of initial public offerings were issued in the Canadian market during the last quarter of 2016, but they were not enough to save it from becoming the worst year for IPOs, according to a PwC survey.

Aritzia Inc.’s $400-million IPO in October was one of only three issues on the TSX for the whole year; two other issues made during the final months of the year brought the exchange’s quarterly and annual tally to $464 million. Five issues on the CSE added a drop to the bucket, nudging the total up to $466 million. Counting all the exchanges in Canada, there were only eight new issues in 2016.

In 2015, there were 22 issues on all exchanges, with 13 IPOs worth $3.9 billion made on the TSX. The previous low-water mark was set during the 2008 financial crisis: just 57 new issues worth $682 million, $547 million of which was accounted for by the TSX, were made during that year. PwC’s IPO survey has tracked Canada’s equity markets since 1998.

Dean Braunsteiner, national IPO leader at PwC in Canada, sees many possible explanations for 2016’s poor IPO showing, not least of which were global events such as Brexit, the European debt crisis, and the US presidential election. But while 2016 was undeniably bleak for Canadian IPOs, Braunsteiner is optimistic about the coming year.

“The IPO market always lags the traditional equity market,” he said in a statement. “And markets in Canada and the US have marched higher since the US election. Companies considering an IPO are watching that steady upward trend like everyone else. They won't want to get left behind.”

The relative strength of the market for secondary equity issues also shows that investors welcome new opportunities, according to Braunsteiner. During 2016, the market for structured financial products, capital pool companies, and other similar investment vehicles garnered $794 million from 45 issues.

“The year after the previous market low of 2008, the IPO market in Canada bounced back to $1.8 billion in 2009 and $5.5 billion a year after that,” he added. “It's sometimes darkest before the dawn.”


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