Real estate was the “single bright spot” of the second quarter.Kevin Van Paassen/The Globe and Mail
Blame it on a post-Facebook freeze, a summer slowdown or those pesky volatile markets, but whatever the cause for the crawl in initial public offerings, the numbers show that the market is spinning its wheels.
On Tuesday, PwC released its latest look at Canadian equity markets by way of a quarterly survey. It shows that there were only a couple (literally, two) of initial public offerings on the Toronto Stock Exchange in the second quarter of the year – or, indeed, all year – and both were REITs (more evidence of Canada's hot housing market). The Venture Exchange saw 12 new additions and the CNSX scored five new names in the quarter. All 19 new additions had a total value of less than $200-million.
Those numbers really seem stuck when compared to last year. In the first six months of 2012, the total value of the 32 new additions to the marketplace is listed at $220.3-million. By this time in 2011 there were 34 deals, but 10 of them were on the TSX and they had a total value of $1.4-billion.
PwC's national IPO services leader Dean Braunsteiner notes that this disparity has largely been caused by the usual suspects: wilting commodity prices and drooping oil prices. He suggests caution looking ahead to the next quarter, especially since the U.S. saw a real IPO slowdown in its second quarter. He called the lasting interest in real estate the "single bright spot" of the quarter.
The global initial listing numbers really aren't much better, though, with IPO debuts and proceeds both down considerably in the second quarter of the year, according to Renaissance Capital, an IPO advisory firm. Its numbers suggest that the world's IPO activity dropped by 52 per cent, with proceeds declining 36 per cent, since the same quarter last year – even in Asia things are looking grim.
But all these gloomy figures don't necessarily mean a few shining rays won't be able to cut through the clouds. Anecdotal research in Canada's marketplace continues to suggest that there are plenty of companies interested in an IPO, but they are simply waiting for the right market appetite to make their grand entrance.
Just a few days ago, Gateway Casinos & Entertainment chose to postpone its much anticipated IPO. And several other international companies (such as car franchise Formula One in Singapore) also recently stepped on the brakes. There may be enough significant deals in the pipeline to help make up for the slow start this year, but whether those deals will manifest themselves in the short term remains to be seen.