The last time the IPO market in Canada was this bad, the sitcom Friends debuted, Forrest Gump hit theatres, and a guy named Jeff Bezos launched a little book shop called Amazon.
Driving the news: It’s been one year since the Toronto Stock Exchange saw its last initial public offering, with one analyst telling Bloomberg that the “economy isn’t focused on the sectors where investors want to put their money,” including technology and healthcare.
- The historic IPO drought started after a March 2023 listing by Lithium Royalty and has since turned into the worst year for IPOs that Canada has seen in 30 years.
Why it’s happening: Amid ongoing AI fever that has propelled the S&P 500 and Nasdaq to record highs, sectors like energy, mining, banking, and insurance — which account for roughly three-quarters of Canada’s equity market — aren’t as appealing to investors.
Why it matters: The IPO market can be a barometer of the confidence businesses and investors have in the country’s economy. The longer this dry spell continues, the louder the message to companies that Canada isn’t a great place to raise capital at the moment.
- Other factors, like voting requirements that give shareholders more power, executive pay disclosures, and strict corporate governance regulations, add to the persistent drag.
What’s next: Analysts believe that things won’t turn around until at least the second half of this year, but one expert says that because North American markets are so integrated, the recent injection of confidence in the U.S. market could spill over north of the border.—LA