Photos of the TD Securities trading floor in Toronto on April 3 2013.Fred Lum/The Globe and Mail
A sudden resurgence of institutional demand for equity financings is making it much easier for companies to raise money.
Although the S&P/TSX Composite Index has been on a wild run since June 2013, climbing nearly 20 per cent in that period, it wasn't until recently that scores of deals started flying off the shelves. For the longest time, big money managers were extra selective about which deals they would participate in.
That's all changing. Fast. In the past week a number of bought deals have seen heavy institutional demand, allowing the issuers to upsize their offerings. Although some of the deal sizes were small to begin with, the trend is certainly promising.
Recent deals that were upsized include: Marquee Energy's increase to $17.5-million; Mason Graphite's to $10-million; Westaim Corp.'s to $110-million; and Cargojet's to $67-million.
Also, Lumenpulse's initial public offering raised $100-million, the top end of its marketing range, with over $1-billion in order demand.
In other cases, issuers have chosen to keep their original offering size, despite having extremely heavy demand. Long Run Exploration, which had a ton of institutional interest but kept its deal size at $120-million, is one recent example.
The fear now is that the good times will be short-lived. U.S. technology stocks are taking it on the chin, and there are concerns that their sell-off will lead to a broad market slump.
Tim Kiladze