PwC: Miners drive $5B year in Canadian IPOs

The following is an edited summary from PwC about its annual IPO survey. For more information, visit www.pwc.com.

The 2017 market for initial public offerings (IPOs) in Canada raced across the finish line to post a $5.1-billion, five-year record for total proceeds raised from new equity issues, according to PwC’s annual survey.

Driven by heavy activity in the mining sector, a strong final quarter of 2017 raised $1.7 billion in new equity from 13 new issues, helping to lift the full-year tally to $5.1 billion from 38 issues from Canadian companies or companies listing on Canadian exchanges. The fourth quarter tally includes the $728-million dual listing of Luxembourg-incorporated Nexa Resources on the TSX and the NYSE.

The TSX welcomed seven new listings in the last quarter with a value of $1.5 billion. A total of 17 IPOs were completed on the TSX in 2017, delivering $4.7 billion to issuers, the PwC survey showed. Clementia Pharmaceuticals joined Nexa in sending an IPO to U.S. investors with its $150.2-million issue on NASDAQ.

The activity in 2017 marks a rapid recovery of the Canadian IPO market, as 2016 was the worst year for Canadian IPO activity in nearly 20 years, with just eight new issues worth $464 million.

The mining sector had a large impact on the IPO rebound, with 20 issues making it to the TSX, CSE and Venture in 2017, including six in the fourth quarter.

“It will be interesting to see if that activity percolates down to mid-tier and development companies, and what that portends for junior miners,” PwC national IPO leader Dean Braunsteiner said.

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, he said.

Last year also saw the CSE emerge as an alternative to the TSX-Venture.

“CSE certainly appears friendly to start-up enterprises,” Braunsteiner said. Nine IPOs on the CSE raised $9.5 million in 2017, while 10 issues raised $55.4 million on the Venture.

It is harder to predict the impact of the U.S. tax changes on the Canadian IPO market, Braunsteiner said. Canadian companies with U.S. operations may have a perceived advantage when coming to market here.