Sunshine Oil Sands Ltd.'s move to go public in Hong Kong instead of Toronto may break new ground, enticing other companies seeking large amounts of funds to try Asia instead, argues one of Sunshine's advisers.
With North America's initial public offering market stuttering, Asia offers an enticing opportunity, says Rick Pawluk, a McCarthy Tetrault partner who helped Sunshine with its offering.
"I wouldn't be surprised to see other companies from Canada try Hong Kong," he said in an interview from Hong Kong after Sunshine debuted on the market there.
The stock fell 3.1 per cent in its first day trading in Hong Kong, outpacing a decline in the broader market.
Doing a $600-million IPO, as Sunshine planned, "would have been more difficult in North America than currently in Hong Kong," he said.
To be sure, Sunshine had other reasons for going to Hong Kong. The company has Chinese backers, and some of them preferred a listing closer to home.
The key for other companies watching Sunshine in Hong Kong will be how much support it gets in the aftermarket. An oil sands company listing on the TSX can count on an analyst following, support from sales desks and investment bankers and an active investment community.
As the lone oil sands company in Hong Kong, there's a risk that the stock will be orphaned, which Mr. Pawluk acknowledged. The company has tried to counter that by working hard to educate the Hong Kong market on the oil sands.
There's also the possibility of a TSX listing down the road should the company want more exposure in Canada, where the oil sands are well known. For the moment, however, Mr. Pawluk said Sunshine has no plans to do that.
