A better-than-expected final quarter of 2018 brought the market for initial public offerings (IPOs) in Canada to a $2.2 billion total for the year — less than half of the 2017 total but a “respectable” finish for a market plagued with volatility and uncertainty.

That is just one of the observations of the past year from the annual PwC Canada survey of IPOs in Canada, released today.

The final quarter of 2018 saw 22 new issues on three Canadian exchanges deliver $336 million in new equity, down from the $1.7 billion raised in 12 IPOs in the final quarter of 2017. In all of 2018, 54 new equity issues on four exchanges generated $2.2 billion compared with the $5.1 billion raised from 37 IPOs in all of 2017.

Smaller issues — and more of them — is typical of the Canadian IPO market, suggests Dean Braunsteiner, national IPO leader at PwC Canada. “The fourth quarter was pretty respectable when you consider the market volatility in December,” he notes. “Unlike 2017 that was skewed by the single giant Kinder Morgan Canada offering, 2018 was reflective of a more normal market in Canada.”

The top 10 new issues in 2018 were $100 million or more, the survey reveals. The largest IPO of 2018 was the $462 million Ceridian HCM Holding issue of the second quarter. Second and third places were held by MAV Beauty Brands ($241 million) and AltaGas ($239 million), making the top three issues from three different sectors. “I think that’s a testament to the diversity of the Canadian market,” reflects Braunsteiner.

Two Canadian-domiciled firms also listed on NASDAQ during 2018, the survey shows.

Two new issues on the TSX in the fourth quarter of 2018 raised $254 million, the survey shows, bringing the full-year tally to 11 IPOs worth $1.8 billion on Canada’s senior exchange. The CSE contributed 14 new issues during the quarter while the TSX Venture exchange offered six.

While cannabis issues grabbed the headlines, the surge of activity on the CSE and a return of junior miners to the equity markets were also notable developments of 2018, Braunsteiner says.

The CSE saw 28 IPOs during the year, including a significant number of mining issues. And while the recovery of the mining sector is welcome news, Braunsteiner suggests it is too early to say that the CSE has usurped the traditional role of the TSX Venture exchange as the spawning ground for new mining plays. “The cost-efficient route to public ownership via the CSE certainly appealed to junior miners and other start-up companies that were focused on maximizing the new equity coming their way,” Braunsteiner explains. The CSE was also a popular route for cannabis companies. More than $491 million was raised for cannabis companies on various exchanges in 2018, according to the survey.

The view into the year ahead is less clear, Braunsteiner admits. Uncertainty about interest rates, the continuing Brexit saga and global trade tensions — factors that disrupted markets at the end of 2018 — are expected to persist well into 2019, he says, making it difficult to value new issues and bring them to market. Whether there are more cannabis industry issues before that market segment begins to consolidate is also an open question.

PwC has conducted its survey of the IPO market in Canada for more than 15 years. The reports are issued on a quarterly basis to provide information to the corporate sector, investors, the media and others that will help them put the market into better perspective. For the purposes of the survey, investment vehicles such as structured products are not included in overall survey results because they do not represent new equity raised for operating companies. New issues from companies that are created from the reverse takeover of an existing public company are also not included in the survey.

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