Despite the fact that credit markets are functioning, both the demand for credit and its supply have not yet recovered from the recession.Micheal Falco
A day after TransAxio Highway Concession's IPO was pulled and Whistler Blackcomb Holdings' IPO was repriced, it appears yet another IPO isn't catching on with investors. Global Packaging Plus set out to raise $120-million about a month ago, but sources familiar with the deal said the marketing spiel isn't catching on.
Global Packing Plus was initially set to close last week, but its marketing period has been extended. Should its terms get changed or if the deal is pulled altogether, it will give even more credence to the notion that Canada's IPO market simply isn't open, even though equity markets have been on fire for the past few months.
But that may not be the truth. Although these three IPOS haven't faired all that well, some others aren't in such rough shape. Frontier Rare Earths Ltd., whose main asset is in South Africa, has caught investors' attention with a smaller $40-million IPO led by CIBC World Markets, as has Eagle Energy Trust, which is looking to raise around $150-million and is led by Scotia Capital.
Eagle Energy is a unique deal. The trust plans to acquire on-shore oil and gas assets in the U.S. by raising money north of the border. Because the company is structured as a trust south of the border, it isn't subject to the SIFT income trust tax rules, meaning it can pay a yield around 10 per cent.
Looking at these IPOS together, it's clear that their main driver is a connection to resources. Above all, that appears to catch investors' attention right now.
Tim Kiladze