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On the closing days of June, Capital Power Corporation broke a nine month drought of initial public offerings on the TSX.

The $500 million IPO issued the spin-off of Epcor Utilities, was the only corporate issue to appear on Canada’s senior equity exchange in the second quarter of 2009 and the first corporate IPO on the TSX since the second quarter of 2008, according to PricewaterhouseCoopers.

The single issue, the largest in Canada since 2007, along with improving fundamentals and increasing activity in both the equity and debt markets, supports the view that investor demands for equity is gradually recovering.

“The results from the quarter don’t tell the whole story,” says Ross Sinclair, national leader of PwC’s income trust and IPO services. “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. Valuations are steadily improving. Pricing and credit spreads in the debt market suggest liquidity is slowly coming back. We’re starting to see the market regain some of its appetite.”

Prior to the Capital Power IPO, the market for new corporate issues on the TSX had been dormant for three consecutive quarters, compared to the seven issues on the TSX in the second quarter of 2008.

Sinclair indicates that there are other signs of life in the IPO market, such as increase number of prospectuses and more investors looking for searching for better yield.

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PH&N launches inflation-linked bond fund

RBC Global Asset Management has a new addition to its fund line-up, the PH&N Inflation-linked Bond Fund.

The fund is invested primarily in real return bonds and inflation-linked bonds issued or guaranteed by Canadian and foreign governments and corporations. It is designed for investors who seek a cost-efficient vehicle that generates interest income linked to inflation.

“Many investors today are concerned about the possibility of rising inflation in the future, and this fund is structured to help investors not only save for retirement, but do so in a vehicle that preserves their spending power over the long term,” said John Montalbano, head of RBC Global Asset Management and CEO of Phillips, Hager & North. “Moreover, consistent with our focus on value, this fund is a low-cost leader in its category.”

The MER on the fund ranges from 0.80% for series C units, to 0.30% for Series F units. The fund’s lead managers are Scott Lamont, vice-president and head of PH&N’s fixed income team, and William John, vice-president of the firm.

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Russell names new sub-advisor to overseas portfolio

Russell Investments has named two firms, William Blair & Company and Barrow, Hanley, Mewhinney, & Strauss, as sub-advisor to the Russell Overseas Equity Pool.

The pool is part of the Russell Sovereign Investment Program. Both William Blair and Barrow Hanley have also been added to the Russell Overseas Equity Fund, which is an underlying fund in LifePoints Portfolios.

The two firms replace Wellington Management Company and Sanford C. Bernstein & Co. in the management of both the Overseas Equity Pool and Overseas Equity Fund.

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Fidelity proposes fixed administration fee for mutual funds

Fidelity Investments Canada has proposed fixed administration fees for its mutual funds, in an effort to provide predictability and transparency for investors.

“Replacing operating expenses with a fixed administration fee will allow the MER for each Fidelity fund to become more predictable and provide investors with greater certainty about the costs of investing in a Fidelity mutual fund,” said Peter Bowen, vice-president and fund treasurer, Fidelity Investments Canada ULC.

Operating expenses presently comprise a portion of the MER that varies from year to year, making it difficult to predict the cost to investors. Subject to investor approval, Fidelity will bear all of the operating expenses of the Fidelity funds, other than the GST and certain specified fund costs.

It will also replace fund-operating expenses with a fixed administration fee that will average approximately 0.24% for balanced funds (including packaged solutions), 0.29% for North American equity funds, 0.33% for global equity funds, and 0.11% for fixed income funds.

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RBC named custodian for Wilson Asset Management

RBC Dexia Investor Services will be providing custody services for the investment funds of Wilson Asset Management, an independently-owned boutique investment manager based in Sydney, Australia.

“Our decision to work with RBC Dexia was based not only on their very impressive track record for providing the highest quality of custody services, but also upon their demonstrated flexibility and willingness to accommodate our specific requirements and business objectives,” said Geoff Wilson of Wilson Asset Management.

(07/07/09)