TSX's lone IPO this year seen as encouraging
A single stock issue in June by a company new to the TSX was the first initial public offering (IPO) since mid-2008, PricewaterhouseCoopers said Tuesday.
The $500 million IPO by Capital Power Corp. of Edmonton doesn't show the IPOs are bouncing back, but may be one of several "hopeful signs" for the market, Ross Sinclair, leader of the consulting company's income trust and IPO services, said in a news release.
"We're starting to see the market regain some of its appetite," he said. "The volumes are still very small but the Capital Power issue, along with some significant activity in secondary equity offerings and debt issues across the markets, point to a level of financing activity that has been absent for some time."
In fact, two other IPOs closed Tuesday, but missed the PricewaterhouseCoopers' report, which covered the first half of the year.
About $850 million worth of stock in mortgage insurer Genworth MI Canada Inc. began trading Tuesday. Most of the shares were sold by its U.S. parent company.
Issued at $19 each, the stock slid 61 cents to $18.39.
Magma Energy Corp., a geothermal power company, said it raised $100 million selling stock at $1.50 a share. It fell two cents to $1.48.
Companies that are not publicly traded are considering IPOs, and investors, looking for better returns than the low interest rates on bonds, are becoming more open to equity issues, Sinclair said.
The Capital Power issue was sold at $23 a share and began trading on the TSX on June 26, exchange data show. It has dropped since, falling 60 cents to $21.05 Tuesday.
Capital Power, an electricity generating company spun out of Epcor, the utility owned by the city of Edmonton, was the only TSX IPO in the second quarter this year and first since the comparable period on 2008, PricewaterhouseCoopers said.
Including the TSX junior venture exchange and "other" issues, total IPOs were $514.8 million in the quarter.
There were seven TSX IPOs worth $434 million in the second quarter of 2008.
The figures do not include issues of stock by companies which were already publicly traded, and do not include mutual funds — which raise money to invest in existing listed companies — which have come bounding back in the second quarter of 2009 after sagging at the end of 2008 and the first quarter of 2009.
Capital Power will use the money raised to buy Epcor's power generation business, including its 30.6 per cent interest in Epcor Power LP. Epcor has about 3,300 megawatts of owned and/or operated generation capacity at 31 plants in Canada and the United States.
The Alberta Federation of Labour has tried to block the sale legally, but failed, Epcor said.