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Rough equity markets taking toll on financings

Equity market have yet to find a bottom amidst all of the negative sentiments floating around trading desks, and that's starting to have an effect on the amount of new money companies can raise.

On Friday Nautilus Minerals Inc. announced that it has had to pull its market offering because of "weak financial market conditions." A few weeks back, encouraged by TD Securities and Credit Suisse, the company set out to raise about $150-million.

Nautilus's stock popped on the news, and its up about 13 per cent today.

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But Nautilus isn't the only company that has been affected. Equity financings have slowed down significantly across the street. The total amount raised in May was about $2.5-billion, according to TMX Group, down from $3.3-billion in April. More surprisingly, May's total is about $1-billion lower than May 2010, which was the middle of the European debt crisis.

However, acquisition financing still has some legs. In the past few weeks Fortis Inc., Primaris Retail REIT and Intact Financial have all raised money to partially fund new purchases. And in some cases, like Intact, there has been extremely heavy demand for the product.

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About the Author
Reporter and Streetwise columnist

Tim Kiladze is a business reporter with The Globe and Mail. Before crossing over to journalism, he worked in equity capital markets at National Bank Financial and in fixed-income sales and trading at RBC Dominion Securities. Tim graduated from Columbia University's Graduate School of Journalism and also earned a Bachelor in Commerce in finance from McGill University. More

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