2003 IPO market cooled after trust-laden 2002

(January 7, 2004) If 2003 seemed like a slow year for initial public offerings (IPO), it was only in comparison to a strong 2002, according to the annual PricewaterhouseCoopers report on IPO activity.

While the number of IPOs was down 20% from the previous year, this was largely due to the strong demand for new income trusts coming to market in 2002.

“It must be recognized that the market’s considerable appetite for income trusts in 2002 pushed the total activity and value up dramatically,” says Eric Slavens, IPO services leader for PricewaterhouseCoopers.

In 2002 there were 69 IPOs, 35 of which were income trusts. As the trust market cooled down in 2003, there were only 21 trusts brought to market, with the number of traditional issues increasing by one to 35.

The gross value of IPOs was $4.6 billion, a decrease of nearly 21% from the total of $5.8 billion in 2002. The highest valued IPO was the Yellow Pages Income Fund, which took in $935 million. That figure boosted the technology and media sector to the top of the table, with a total value of $1.5 billion from eight offerings.

Mining was the most active sector, with 16 new companies (worth $43.6 million) coming to market, followed by 15 in the “products” sector ($1,214.9 million) and 10 newly listed oil and gas companies ($574.6 million).

Slavens says the market appears to be ready to return to more traditional equity offerings.

“Workbrain Corp., an IPO worth $40 million placed in December, is the first software offering in the Canadian market in three years,” he says. “Another December IPO, GMP Capital Corp. came to market in the Financial Services sector worth $100.1 million. These and others suggest that more traditional initial public offerings may be making a comeback.”

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com