Turnaround of IPOs sets stage for a good year in 2018: PwC

Canadian initial public offerings rebounded last year from their worst performance in nearly two decades in 2016 as $5.1 billion in proceeds were generated with the prospect for a strong 2018, says PricewaterhouseCoopers.

There were 38 issues from Canadian companies or companies listing on Canadian exchanges in 2017.

That included 13 in the fourth quarter, which raised a total of $1.7 billion.

Six of those were in the mining sector last quarter, raising the total number of sector IPOs for the year to 20.

A total of $4.7 billion was raised from 17 listings on the Toronto Stock Exchange and $55.5 million from 10 listings on the Venture Exchange.

In 2016, total proceeds amounted to $466.7 million from eight offerings.

A dismal 2016 was followed by a buoyant 2017, said Dean Braunsteiner, PwC national IPO leader.

“It certainly was a big turnaround in 2017 and I would say it was a bit of the stars aligning to allow the IPO market to bounce back the way it did,” he said in an interview.

Braunsteiner said the foundation started after the U.S. election in late 2016 when equity markets continued to increase and created opportunities for venture capitalists and private equity funds to monetize their investments.

He said signs are pointing to another good year.

“I think 2018 is certainly looking like it’s going to be another blockbuster year,” he said.

Braunsteiner said it’s difficult to forecast an amount of proceeds because companies are holding their cards a bit closer about whether to pursue IPOs, joint ventures, partnerships or asset sales.

“It’s hard to look into the pipeline to get a good predictor of what the market might be in 2018 but as long as the equity markets continue to run I think we’ll have a strong IPO market this year as well,” he added.

Despite accounting for more than half of public offerings last year, proceeds from mining offerings totalled $947.3 million, trailing energy at $2.02 billion.

Pharmaceuticals and health raised $668.5 million, retail $665.4 million, industrial products $400.1 million and other $416.5 million.

Low commodity prices have curtailed mining IPOs for the last five or six years.

But a stabilization of prices could create some action among junior miners that have historically accounted for a lot of the IPO activity, Braunsteiner said.