Canadian IPO activity seen accelerating in 2018

Initial public offerings by Canadian companies are expected to increase in 2018, driven by activity in industrials, alternative energy and base metals sectors, banking advisers said.

Companies raised C$4.6 billion ($3.7 billion) through IPOs in Canada in 2017, marking a surge in activity following a lull the previous year, according to numbers from Thomson Reuters that were released on Thursday. There were 22 IPOs, the highest for Canada since 2013.

Global equity markets have been climbing, generating a positive climate for company flotations, despite uncertainty around trade deals and the political environment. “The markets are very much shrugging off all of these risks right now and maintaining quite a bit of calm and optimism,” said Peter Miller, head of global equity capital markets at BMO. “The IPO market looks more attractive versus the M&A alternative.”

Kirby Gavelin, head of equity capital markets at RBC, said he was bullish on Canadian equities activity in 2018. Gavelin said he expects to see companies in the energy and mining sectors file to go public if prices hold up, following last year’s IPO from oil pipeline operator Kinder Morgan Canada Ltd that raised C$1.75 billion.

In the last two years, new shares in the Canadian stock market are increasing as the alternative energy industry and the new power-driven automobile industry heat up. Industrials, raw materials and energy industries have also attracted the attention of these industry-related companies to seek further development, listing or issuing new shares has become one of the first choice to promote industrial expansion. The listing of these new shares increases the base of arbitrage for equities and increases the number of arbitrage opportunities for equities. 2018 will be a very favourable year for stock arbitrage.