Several big brands across the U.S., including Twitter, are planning IPOs.DADO RUVIC/Reuters
Twitter. Chrysler. Hilton. Several big brands across the U.S. are serving investors notice of their intention to tap into the public markets.
There has been attractive stability south of the border, with the S&P 500 rising evenly from November to June, up a total of 16 per cent in the past year. That has led to a strong flow of initial public offerings, with IPOs' pricing up more than 30 per cent in the last year. Industries such as tech have moved to cash in.
But the Canadian market has also been receptive to IPO deals – and not just to the real estate investment trusts that dominated new issues at the beginning of 2013.
"One thing that has happened in Canada is there has been a bit of a transition, that people are willing to look at growth opportunities and are really demanding growth stories," said Dan Nowlan, co-head of equity capital markets at CIBC World Markets.
Mr. Nowlan said feedback from institutional and retail investors changed at the end of 2012, and they became very focused on liquidity and growth. "The larger the deal, the better it was," he said.
And that's even with unsteady markets. If the S&P 500 index looks like an up ramp, the S&P TSX's last year looks more like a mountain range, with swings in both directions and up just 3 per cent overall.
That has had an impact on IPOs. Some, such as PRO REIT and solar power producer Silver Ridge Power Inc., pulled their planned offerings due to market conditions and lack of investor appetite.
More broadly, the resource sector is also quiet, particularly in mining where commodity prices and higher costs have weighed on the industry. And that has meant that overall IPO issuance is down in Canada.
Despite that slump, REITs have stepped in to carry the weight, said Dean Braunsteiner, leader of PricewaterhoouseCooper's IPO services group in Canada.
"We've been so reliant on mining and the extractive industries in general. It was quite a good sign to see that another sector could come along and help things out," he said.
So, while there were fewer Canadian IPOs in the first half of the year than last year, the ones that have come to market have exceeded 2012's proceeds in the same period.
Now the question is whether real estate can continue to offer a boost in a rising interest rate environment, Mr. Braunsteiner said.
Canadian Tire Corp. is certainly hoping there's some runway left as it prepares to transfer 72 per cent of its owned property into CT REIT.
In addition to CT, several other IPOs will reach the market in the next few weeks, said Mr. Nowlan. So while the Twitter IPO may have caused a flutter of activity on its social media platform yesterday, there are plenty of deals worth watching north of the border too.
By the numbers:
$5.1-billion: The amount raised by the world's largest IPO this year. The company behind it is the Brazilian pension and insurance business BB Seguridade Participacoes SA.
19 per cent: The amount of global equity capital market activity that IPOs accounted for in the first three-quarters of the year, according to data from Thomson Reuters.
$1.3-billion: Total proceeds from IPOs on all Canadian exchanges in the first and second quarter of the year, according to PricewaterhouseCoopers. This compares to just $220-million for the first six months of 2012.