Echelon, BLG team up to create “capital pool company”

The dismal number of initial public offerings (IPO) on Canadian exchanges in 2016 added up to the worst annual showing in nearly two decades, according to PricewaterhouseCoopers LLP’s (PwC) annual report on the Canadian equities market.

There were eight new issues on all Canadian exchanges in 2016, which raised a total of $466 million. The $400 million deal for Vancouver-based Aritzia Inc. in October was one of only three new issues on the Toronto Stock Exchange, while the Canadian Securities Exchange saw five new issues.

The total for 2016 contrasts sharply with $3.9 billion that was raised for 22 new issues on all exchanges in 2015. Last year’s tally was the lowest PwC has seen since the consulting company began producing these IPO studies in 1998.

The poor IPO performance in 2016 can be attributed to the uncertainty felt in the IPO market as a result of the European debt crisis, the U.K. vote in June to leave the European Union and the U.S. presidential election in November, according to Dean Braunsteiner, national IPO leader at PwC Canada in Toronto.

However, Braunsteiner believes 2017 will be a more positive year for IPOs and that the technology sector could be one area that will benefit from a revival in offerings.

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

A large IPO for an unidentified special acquisition company (SPAC), a publicly traded company that raises money to buy an existing private company, is expected in 2017. SPACs failed to make an impression on the IPO market in 2016 after becoming a notable factor on the market in 2015.

Photo copyright: cooldesign/123RF