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Canadian IPOs to rebound in 2013?

Jennifer Kwan

If last quarter was anything to go by, there is hope 2013 may bring more initial public offerings.

International consulting firm PwC said $1.3 billion worth of equity was issued in the fourth quarter by public companies, which essentially made up for a rather sluggish year for IPOs. Dean Braunsteiner, PwC's national IPO services leader, said that could be a sign of more good things to come.

"What the fourth quarter demonstrated is there's certainly an appetite for IPOs if the right investment comes along," he said.

"There's a significant amount of cash on the sidelines waiting for the right investment."

Braunsteiner said while market observers are typically used to seeing the mining sector play an important role in the Canadian IPO market, resources shared the spotlight with the consumer products, retail, energy and real estate sectors.

"The results of the last quarter not only speak to the pent-up demand for equity capital, they are a testament to the underlying strength of the larger Canadian economy," he said.

The fourth quarter of 2012 was the strongest quarter since the second quarter of 2011, and there is a healthy backlog of IPOs still in the pipeline, added Braunsteiner.

"We've seen a lot of IPOs in the development stage, across numerous sectors," he said, noting there is some $700 million in the IPO pipeline already.

Among the big IPOs in the final quarter of 2012 was Hudson's Bay Co., with a $365-million IPO in November. Mining company Ivanplats Ltd. raised $301 million through its IPO, the second-largest in 2012 and the largest last year in the mining sector, said PwC.

The biggest risks to IPOs include U.S. budget and debt ceiling discussions and the economic health of China. Debt problems in Europe also pose a key risk.

"The global recovery will certainly drive the pace of IPO activity in 2013," said Braunsteiner.

PwC said there were 62 IPOs last year across all Canadian exchanges worth $1.8 billion in new equity, compared with 61 IPOs and $2 billion of new equity in 2011.