IPO activity getting real in 2017—but will it last?

Optimism builds after a healthy array of initial public offerings from firms in tech, bioscience, energy and retail
By Listed Staff

When you’re coming off the worst year in the last 19, it’s hard not to show some improvement. But will 2017 actually do one better and go down as a bumper year for initial public offerings in the Canadian markets?

With real estate network management service provider Real Matters Inc. of Markham, Ont. (TSX:REAL), pulling the trigger on its IPO in early May—raising in the neighbourhood of $150 million—the prospect of the first major tech IPO since Shopify Inc. (TSX:SHOP) two years ago has lots of folks buzzing. Better yet, that offering came right on the heels of another early-May IPO by Zymeworks Inc. (TSX:ZYME), a Vancouver biotherapeutics company developing treatments for cancer, autoimmune and inflammatory diseases. That offering, in Toronto and New York, netted about $80 million.

These deals reinforce a trend that saw a handful of IPOs in the first quarter getting “2017 off to a better start,” than last year, says Scott Cochlan, co-head of the capital markets practice at Torys LLP. The highest profile of those were from Toronto-based clothing maker Canada Goose Holdings Inc. (TSX:GOOS) and health-food restaurant chain Freshii Inc. (TSX:FRII), which raised $391 million and $125 million respectively.

Cochlan, who is based in Torys’ Calgary office, notes that we’ve also seen three service-company IPOs announced of late. When Source Energy Services Ltd. (TSX:SHLE) raised $175 million in April it marked the first large IPO by a Canadian energy firm since 2014. Step Energy Services Ltd. (TSX:STEP)—like Source, a fracking services firm—joined it in May, with a $100-million raise. BOS Solutions Holdings Inc. filed its preliminary prospectus for an IPO but has yet to close. Tempering the excitement there, however, is that both the Source and Step IPOs had to be re-priced and raised less money than initially hoped, Cochlan says.

The question now is whether this early momentum will be maintained throughout the year. Since 2015, a number of other tech firms have been seen as IPOs-in-waiting, but at least two of those—PointClickCare Technologies Inc. and Vision Critical Communications Inc.—have done recent private financings instead. The firm that would make the biggest impact in this space, of course, is Hootsuite Media Inc. of Vancouver. Cochlan says he can’t speak to tech specifically, other than to note, “sentiment still seems to be optimistic” with “strong investor interest.”

The broad, multi-sector representation of firms in this year’s IPO crop bodes well for continued activity, too. Beyond that, when anticipating what might unfold for the duration of 2017, the usual caveats—the need for “continued growth from companies and positive market conditions to remain in place”—apply, says Cochlan.

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