IPO Fever Fuelled by Tech Sector
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[Toronto, CANADA] IPO activity in 2000 outpaced the performance of 1999, thanks in large part to both technology and financial services organizations. And contrary to financial folklore, which counts Canadian companies among those drawn to the larger U.S. capital markets, there were actually very few who took their initial offerings south of the border. These are only some of the findings of the annual PricewaterhouseCoopers survey of Initial Public Offering activity on Canada's principal stock exchanges during the 2000 calendar year.
The survey, conducted by the firm's IPO Services group, showed that a total of 101 IPOs were successfully completed during 2000, compared to 92 in 1999. The total value of these offerings was CDN $6.8-billion, up 1.4 percent from the CDN $6.7-billion during 1999.
While the pace of IPO activity in the second half of 2000 was ahead of the first six months (54 IPOs successfully completed in the second half versus 47 in the first), the survey indicates that the value of IPOs decreased considerably during the second half of 2000. Two-thirds of the total value of the offerings CDN $4.6-billion - were recorded in the first six months of the year.
IPO activity in nine sectors, from financial services, forestry and life sciences to mining, oil, real estate and technology, was examined in the survey which covered the Toronto, Montreal and CDNX exchanges.
The most active sector for new issues was technology and media, with 35 IPOs during the period, an increase of 45.8 percent over the 24 issues of 1999. The value of all IPOs in the sector jumped 348.2 percent in 2000, to CDN $2.7-billion from the CDN $598.6-million of the previous year.
Financial services led all sectors in value of IPOs during the year, with 24 IPOs accounting for an aggregate value of $3.7-billion (versus 26 issues in 1999 with a value of $5.8-billion). But only four of these were traditional companies raising equity through common shares. Twenty of the 24 financial services IPOs were issues of managed financial portfolios, and they represented CDN $1.6-billion or 42.1 percent of the total value of IPOs in the sector.
The market for dot-com companies also appeared on the IPO radar screen as five companies issued IPOs in 2000 versus one company in 1999. But the overall value of offerings from these companies continues to be low.