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Shares of Sleep Country Canada closed down nearly 5.3 percent to $16.11 on their first day of trading, hitting an intraday low of $16.10. As BNN's Paige Ellis explains, the disappointing debut has some questioning the $17.00 issue price.

A seemingly minor occurrence last week could help revive the lethargic Canadian initial public offering market.

On Nov. 4, Sleep Country Canada Holdings Inc. broke through its IPO price for the first time. Shares in the Canadian mattress retailer rose 14 per cent after the company reported significantly better-than-expected earnings in the third quarter. In the days that followed, the stock moved higher. Sleep Country is now trading nearly 10 per cent above its IPO price of $17.

Sleep Country's breakthrough is important as this wasn't just any IPO. The mattress retailer's mid-July offering was a big factor that threw the IPO market into a funk in the summer. Priced too high. Too much stock sold. Investment bankers had overreached and Sleep Country was the first sizable (Sleep Country raised $300-million) Canadian IPO to trade down on Day 1 in 2015.

Post-Sleep Country, the IPO market went cold. After a run of successful offerings from the likes of Cara Operations Ltd., Shopify Inc. and Stingray Digital Group Inc., new offerings came only in dribs and drabs. When equity markets came off the rails in August, it was all over. There was no post-Labour Day bounce. In October, real estate investment firm Tricon Investment Partners Inc. pulled its IPO. Then credit card maker CPI Card Group Inc. limped onto the Toronto Stock Exchange in a drastically downsized offering.

Now, Sleep Country's bounce – coupled with the early success of Hydro One Ltd.'s recent IPO (which priced at $20.50 and closed Thursday at $22) – bodes well for a late-year rebound in the market.

"The deep market freeze of September and early October appears to be thawing," said Neil Selfe CEO of Infor Financial Group, a Toronto-based boutique investment bank, in an interview. But Mr. Selfe – who is also CEO of Infor Acquistion Corp., a special purpose acquisition corporation that went public earlier this year – stressed that it's too soon to call an IPO rebound.

"It's too early to say that the tide is turning. A couple of successful deals does not constitute a shift, and there is still a fair bit of macro uncertainty," he said.

When investment bankers pitch IPOs to companies, they use the same bag of tricks most salespeople employ. They play up the positive, play down the negative and use narrative to their advantage. With Sleep Country now trading above its IPO price, bankers suddenly have a new narrative: "Hey, XYZ Corp., now is the time to do an IPO, because Sleep Country proves the market is back."

Hydro One's success in getting out the door adds to that narrative. Despite the political heat the Ontario government took, including a critical report released days before Hydro One went live, last week's public debut mostly went off without a hitch. The jump on Day 1 and the upside in the shares that followed is the dream scenario for investment bankers. The IPO paves the way for future Hydro One offerings at higher prices and vindicates the decision to piecemeal the offering, as opposed to blowing it out in one shot.

Last Friday, Kew Media Group Inc., a SPAC filed for a $70-million IPO in Canada. A small offering – but still the first new filing in some time. Whether Kew Media's IPO is the beginning of a third act in the 2015 Canadian IPO market is unknown.

With a little under two months to go in the year, there is still time for investment bankers to end 2015 with a flourish. The much followed "league tables" ranking investment banks in terms of revenue reveals a tight race. In Canadian equity IPOs, TD Securities Inc. is running in first place but BMO Nesbitt Burns Inc. is breathing down its neck, according to Bloomberg data. RBC Dominion Securities Inc. which did not participate in any of the lucrative SPAC IPOs, is running a distant third. A deal here or there for BMO or TD will decide who finishes top dog.

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