Equity financing activity in the second quarter remained in-line with the previous quarter, according to a report released today by The Investment Industry Association of Canada (IIAC).

$11.6 billion in capital was raised during the period, up 2.6% from the first quarter but down 26.9% year-over-year, the IIAC says.

Canadian equity markets were propelled by energy and materials sectors which pushed the S&P/
TSX Composite to new levels, surpassing the 15,000 mark in May — gaining 8.4% for the quarter and outperforming many global indices.

However, the momentum in the Canadian markets could not be sustained. The latter half of June proved to be difficult, as recessionary and inflationary concerns brought the S&P/TSX Composite back down and closing at 14,467 for the quarter.

“Uncertainties in the global outlook remain and this is adversely impacting financing activity” says Jack Rando, director of capital markets, IIAC.

Reduced activity among private placements and secondary offerings drove common equity financings down to $6.9 billion — a decline of 21.7% from last quarter and 37% year-over-year, the IIAC says.

The IIAC says there was some improvement in the initial public offerings (IPO) market, which showed signs of life in the second quarter and posted modest gains from a poor performance in Q1. A total of 73 IPO offerings raising over $700 million in capital were recorded during the quarter.

On bright spot in the second quarter was the income trust sector, which rebounded by raising $1.8 billion in capital during the period — up a whopping 400% from Q1, but still well below last year’s totals.

Looking ahead, “Equity financings in the second half of the year may additionally be impacted from the recent pullback in oil and other commodity prices as well as any further deterioration in economic health,” concludes Rando.