PricewaterhouseCoopers

PricewaterhouseCoopers

April 06, 2006 09:50 ET

Income Trusts Ramp up First Quarter IPO Market, PwC Survey Shows

TORONTO, ONTARIO--(CCNMatthews - April 6, 2006) - Despite a slow start and a lingering sense of caution among issuers, the IPO market gradually picked up speed in the first quarter to record a significant increase in the total number of new issues and a jump in the value of new offerings, a survey by PricewaterhouseCoopers (PwC) revealed today. New income trusts accounted for the largest portion of the value of new equity.

The PwC survey of IPO activity on the TSX and TSX Venture Exchanges for the first three months of 2006 showed the total number of new offerings moved ahead 47.8% from 23 in the first quarter of 2005 to 34 in the same period of 2006. The total number of issues was heavily influenced by a large number of smaller mining issues on the TSX Venture Exchange.

The total value of all new issues in the first quarter of 2006 was $2.0 billion, up from the $1.2 billion in the same period of 2005, the survey revealed.

New income trusts dominated activity on the TSX in the first quarter. There were 10 new income trusts during the period representing a value of $1.3 billion, up from the eight new trusts worth $900 million during the first quarter of 2005.

"It took a long time for the market to find its feet in the first quarter," said Ross Sinclair, national leader for PwC's IPO and income trust services. "Part of that is attributable to the long process involved in a new issue, particularly since so many companies had put their plans on hold because of the uncertainty last year. There was also an air of caution among issuers as they sought clarity on the details of the new federal policy on the taxation status of income trusts.

"We only saw the real strength in March when about 60% of the income trusts reached the market," added Sinclair. "Based on March, the market for new issues - particularly income trusts - will carry real momentum into the second quarter."

The survey results did not include the highly publicized new issue by Tim Horton's Inc. during the period because the issue came from a U.S. entity; additionally, a significant portion of the proceeds were raised on U.S. markets. The survey only covers new issues by Canadian entities. The Tim Horton's issue had an estimated value of $783 million.

"The first quarter of 2006 is a clear demonstration of why you can't bring a new IPO to market overnight," said Sinclair. "First, there was the hesitation while the market waited for the federal government to rule on trusts. Then there was the federal election and, of course, everything stopped over the Christmas holiday break. After that, it took some time to put all the pieces together to launch these new issues. Companies considering new issues need to be planning well ahead."

The largest new issue of corporate equity was the $410 million offering by Addax Petroleum. Most other equity issues were much smaller: the total value of the top five corporate IPOs in the first quarter was $582 million.

By comparison, the top five income trusts - led by Jazz Air Income Fund at $235 million - represented $960 million of the total for the three month period. (For more detail, see the charts below.)

About PricewaterhouseCoopers

PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 130,000 people in 148 countries work collaboratively using connected thinking to develop fresh perspectives and practical advice. In Canada, PricewaterhouseCoopers LLP (www.pwc.com/ca) and its related entities have more than 4,300 partners and staff in offices across the country.

(Unless otherwise indicated, "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP, Canada, an Ontario limited liability partnership. PricewaterhouseCoopers LLP, Canada, is a member firm of PricewaterhouseCoopers International Limited.)



PwC Survey of Capital Markets/IPOs in Canada
January 2006 - March 2006

Full year comparison

------------------------ ------------------ -----------------------
Total Market TSX Income Trusts
------------------------ ------------------ -----------------------
2005 (119) 2005 (74) 2005 (40)
$7.0 billion $6.7 billion $5.0 billion
------------------------ ------------------ -----------------------
2004 (87) 2004 (56) 2004 (26)
$6.1 billion $5.9 billion $3.1 billion
------------------------ ------------------ -----------------------

First Quarter Results

------------------------ ------------------ -----------------------
Total Market TSX Income Trusts
------------------------ ------------------ -----------------------
Mar 06 (34) Mar 06 (17) Mar 06 (10)
$2.0 billion $1.9 billion $1.3 billion
------------------------ ------------------ -----------------------
Mar 05 (23) Mar 05 (14) Mar 05 (8)
$1.2 billion $1.2 billion $.9 billion
------------------------ ------------------ -----------------------


Top 5 Corporation IPOs (M $ Canadian)

-----------------------------------------------------------------------
Name Value Sector
-----------------------------------------------------------------------
Addax Petroleum $410 Oil & Gas
-----------------------------------------------------------------------
Polaris Minerals Corporation $75 Mining
-----------------------------------------------------------------------
Pure Energy Services Ltd. $50 Oil & Gas
-----------------------------------------------------------------------
Aurora Energy Resources Inc. $25 Mining
-----------------------------------------------------------------------
International Nickel Ventures Corporation $22 Mining
-----------------------------------------------------------------------
Total $582
-----------------------------------------------------------------------

Top 5 Income Trust IPOs (M $ Canadian)

-----------------------------------------------------------------------
Name Value Sector
-----------------------------------------------------------------------
Jazz Air Income Fund $235 Transportation
-----------------------------------------------------------------------
Resolve Business Outsourcing Income Fund $225 Services
-----------------------------------------------------------------------
Crombie Real Estate Investment Trust $205 Real Estate
-----------------------------------------------------------------------
Supremex Income Fund $175 Retail & Consumer
-----------------------------------------------------------------------
Futuremed Healthcare Income Fund $120 Technology & Life
Sciences
-----------------------------------------------------------------------
Total $960
-----------------------------------------------------------------------



Contact Information