Upward trajectory in ETFs’ AUM expected to continue

A resurgence in the mining sector in the final months of 2017 pushed total proceeds from initial public offerings (IPOs) in Canada to $5.1 billion last year, up from $466.7 million in 2016, suggests PricewaterhouseCoopers LLP (PwC) in a new report.

The total proceeds for 2017 also represents a healthy increase from the $3.9 billion that was raised in 2015.

“A pretty dismal 2016 was followed by a buoyant 2017, a pattern we’ve seen over the years,” says Dean Braunsteiner, national IPO leader at PwC, in a statement. “The seeds for the recovery of 2017 were sewn in the last quarter of 2016 and activity just continued to build all year.”

The number of deals surged in 2017, with the Canadian markets hosting 38 transactions during the year, compared with just eight deals in 2016. Deal flow last year reached its highest level since 2012.

Moreover, competition for listings also appears to be flourishing in Canada, with the Canadian Securities Exchange (CSE), Aequitas NEO Exchange Inc. (NEO), and Nasdaq recording a combined $327.1 million in IPO activity in 2017, up from just $2.7 million in 2016. Indeed, one of the top 10 deals of the year was hosted by NEO, when an SPAC raised $161.1 million on the exchange in the fourth quarter.

PwC reports that strong deal activity in the mining sector in particular helped drive the market’s rebound in 2017. In the fourth quarter alone, there were six IPOs in the mining sector, it notes.

“It is significant that 20 mining issues made it to the Toronto Stock Exchange (TSX), CSE and [TSX Venture Exchange] in 2017,”adds Braunsteiner. “It will be interesting to see if that activity percolates down to mid-tier and development companies, and what that portends for junior miners.”

Looking ahead to the coming year, “stabilizing commodity prices and the interest in copper, lithium and cobalt driven by the potential for electric vehicles will likely influence the 2018 IPO market,” the PwC report says.

The report also suggests that private equity investors that are looking to cash in could also help keep the deal pipeline flowing in 2018. “Several high-profile new issues from companies like Roots, Canada Goose, Jamieson Wellness and Real Matters in 2017 suggest private equity and venture capital firms will catch the wave this year,” Braunsteiner says.

Additionally, he notes that CSE has emerged as a viable alternative to TSX Venture Exchange (TSXV) as a listing venue. “CSE certainly appears friendly to start-up enterprises,” he says. PwC reports that the CSE hosted nine IPOs in 2017, raising $9.5 million, compared with 10 issues that raised $55.4 million on TSXV.

“We continue to see quality companies from across the spectrum complete successful offerings in a market where investors welcome well-run companies with good track records. There is money on the sidelines just waiting for the right opportunity,” Braunsteiner concludes.