A $500-million initial public offering by Capital Power Corp. in the closing days of June was the only new corporate issue to appear on Canada’s senior equities exchange in the second quarter of 2009 and the first corporate IPO on the Toronto Stock Exchange since the second quarter of 2008, reveals a PricewaterhouseCoopers LLP survey of IPOs on Canada’s equity exchanges.

The single issue on the TSX, along with improving fundamentals and accelerating activity in both equity and debt markets, may point to the first signs of recovery in the market for new equity issues. Until the June Capital Power IPO, the market for new corporate issues on the TSX had been dormant for three consecutive quarters. There were seven new issues on the TSX worth $434 million in the second quarter of 2008.

There were 10 new issues on all exchanges in the first half of 2009 with a total value of $517 million, the PwC survey reported. By comparison, there were 38 new issues on all exchanges in the first half of 2008 with a total value of $614 million. The TSX saw 10 new issues in the first half of 2008 with a value of $547 million.

The TSX Venture Exchange accounted for three IPOs in the April 1 – June 30, period, for a total value of $13.4 million. The TSXV results were down compared with the nine IPOs valued at $30 million in the same period of 2008, the survey showed. In the first half of 2009, six IPOs valued at $15.8 million reached the TSXV vs 23 new issues worth $61 million in the comparable period of 2008.

While a single issue on the TSX does not signal a turnaround for the IPO market, there are other hopeful signs of a thaw in the frozen market for new equities issues. Ross Sinclair, national leader of PwC’s Income Trust and IPO services, views the quarter’s activity with interest.

“The results from the quarter don’t tell the whole story,” Sinclair 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. 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.”

Sinclair sees other activity beneath the surface of the published data that may be signs of life in the IPO market: “There are a number of prospectuses making the rounds or in development that would indicate companies have sized-up the market and determined valuations have improved enough to make an issue worthwhile. And on the other side of the equation, we are seeing investors slowly moving off the sidelines in search of better yield. Lacking a market for new income trusts, it will be interesting to see what kind of creative solutions beyond traditional common share equity this market will generate.”