(January 9 – 09:30 ET) – IPO activity in 2000 outpaced the performance of 1999, fuelled by Technology & Media and Financial Services organizations. And, contrary to the perception that Canadian companies are drawn to the larger U.S. capital markets, very few took their initial offerings south of the border.

Those are some of the findings of the annual PricewaterhouseCoopers survey of Initial Public Offering activity on Canada’s principal stock exchanges during 2000.

The survey, completed by the firm’s IPO Services group, showed that a total of 101 IPOs were successfully completed during 2000, compared to 92 in 1999. The total value of these offerings was $6.8 billion, up 1.4% from the $6.7 billion during 1999. The survey did not include the activities of capital pool companies.

While the pace of IPO activity in the second half of 2000 was ahead of the first six months (54 IPOs successfully completed in the second half vs 47 in the first), the survey shows that the value of IPOs decreased considerably during the second half of 2000. Two-thirds of the total value of the offerings — $4.6 billion – were recorded in the first six months of the year.

The survey examines IPO activity in nine sectors: Financial Services, Forestry, Life Sciences, Mining, Oil & Gas, Products (including consumer and industrial products), Real Estate, Technology & Media, and Other (including transportation, environment, pipeline and utilities). The survey covers activity on the Toronto, Montreal and CDNX exchanges.

The most active sector for new issues was Technology & Media, with 35 IPOs during the period, an increase of 45.8% over the 24 issues of 1999. The value of all IPOs in the sector jumped 348.2% in 2000, to $2.7 billion from the $598.6 million of the previous year.

Financial Services led all sectors in value of IPOs during the year, with 24 IPOs accounting for an aggregate value of $3.7 billion (vs 26 issues in 1999 with a value of $5.8 billion). But only four of these were traditional companies raising equity through common shares.

Twenty of the 24 Financial Services IPOs were issues of managed financial portfolios, and they represented $1.6 billion or 42.1% of the total value of IPOs in the sector. These products do not raise new equity for companies, but rather invest in existing shares or other financial instruments.

The three largest Financial Services issues during the year were Sun Life Financial Services ($1.8 billion), ProAMS US Trust ($500.0 million) and Industrial-Alliance Life ($339.8 million).

There is a difference between the perception of NASDAQ as a very attractive destination for Canadian companies looking to issue shares, particularly in the Technology & Media sector, and the reality of taking a company public in the U.S., says Eric Slavens, PricewaterhouseCoopers IPO Services leader.

“There are a number of significant regulatory hurdles and cost considerations for any Canadian company thinking of listing there. In addition, the Toronto Stock Exchange is becoming more sensitive to the needs of technology companies with a new Technology listing classification.”

Market turmoil reduced the overall value of IPOs in the second half of the year, Slavens notes. The volatility in the equity markets during the last half of the calendar year had an impact on the IPO market. The least active month — April — saw only five issues for a total value of $981.3 million while the most active month — October — witnessed 14 offerings with a total value of $871.8 million.

“This is testament for the need for speed,” Slavens says. “The window of opportunity opens and closes very quickly. An important component for any successful IPO today is being ready when the market is receptive.”
-IE Staff