When it comes to initial public offerings of all types in the Canadian marketplace in 2007, CIBC World Markets Inc. retains its spot atop Investment Executive’s ranking of underwriters. (See table on page 41.)

Based on estimated commissions earned by underwriters of IPOs, the investment bankers at CIBC World Markets earned their firm a sizable chunk of the estimated $620.9 million generated in commissions in 2007.

If you dissect the marketplace further, however, other top performers surface. Look at all IPOs on the Toronto Stock Exchange,and CIBC World Markets is still on top, thanks in large part to its strong record with non-traditional IPOs. But examine the traditional IPOs — the common-share offering of corporations going public — and BMO Nesbitt Burns Inc. tops the ranking. Its role as lead underwriter of Franco-Nevada Corp.’s December offering of 72 million shares at $15.20 a share gave the IPO market a much needed $1.3-billion boost.

The deals were smaller on the TSX Venture Exchange, which generated some $42.1 million in commissions, vs the TSX’s $299 million. Vancouver-based Canaccord Capital Inc. shone on the TSXV, ranking top overall and gathering an estimated $6.3 million in commissions, almost twice as much as second-place Blackmont Capital Inc. of Toronto. (See table on page 43.)

Canaccord played the lead underwriter in 64 offerings on the TSXV, raising more than $219 million in 2007 — about 40% of the total raised by IPOs on the TSXV. Indeed, Canaccord was only underwriter on five of those 64 IPOs.

When it came to traditional IPOs on the venture exchange, mining was the sector in which Canaccord had the most interest, underwriting 11 newly listed companies.

In comparison, on the senior market, Canaccord played the role of lead underwriter in only three IPOs, although it was involved in a total of 47 other deals.

It is almost the opposite situation for CIBC World Markets. It participated in no IPOs on the TSXV but was lead underwriter in 21 new issues on the TSX, worth about $1 billion. Whereas Canaccord focused on the mining sector on the TSXV, CIBC favoured IPOs classified as financial services, including split-share offerings. CIBC World Markets also participated in deals with a high total value; it was involved in several IPOs that raised upward of $90 million each.

The market in 2007 was volatile and unpredictable. This made pricing new issues very difficult and — combined with a lack of income trust offerings on the TSX, which traditionally do very well in the market — it is surprising that IPOs generated the numbers they did. As the weeks and months passed, underwriters must have been expecting to generate considerably less revenue than in previous years. However, a resurgence of IPOs in the fourth quarter of 2007 did manage to save the Canadian markets from experiencing the worst year for IPOs in recent history.

Activity in the fourth quarter, as well as in much of the year, was restricted to specific sectors. As is often the case, IPOs of resources and mining companies continued to grow, accounting for about $1.5 billion of the total raised on the TSX in 2007. Industrial products, as well as energy and utilities, were the next most profitable sectors, raising a combined total of $943 million.

On the TSX, RBC Dominion Securities Inc. slipped to third place, in terms of estimated revenue generated from IPOs. As with CIBC World Markets, RBC DS was heavily involved in underwriting financial services sector offerings. But unlike its competitor, RBC DS also was involved in a number of industrial products offerings. Although RBC DS didn’t often take on the role of lead underwriter, doing so in only 14 new issues listed on the TSX, it was very much involved as a secondary agent. It was involved in 45 new issues overall.

Unfortunately for underwriting firms, 2007 saw very few of the megadeals that are usually offered on the TSX. Only eight of 36 traditional IPOs raised more than $100 million this past year, and only two raised more then $200 million. This created an environment that placed more emphasis on the smaller deals and a tighter race to see who would generate the most commission income from IPOs.

On the TSXV, Blackmont was lead underwriter on 31 IPOs, for a value of $42.5 million. It participated in four others, taking its underwriting revenue from the TSXV to an estimated $3.4 million.

@page_break@Underwriters may be facing another hit, should the market in 2008 fail to experience a broader base of growth, although IPOs may be able to gain some momentum in commodities, utilities and emerging renewable-energy industries.

However, with companies and investors distracted by the credit crunch and market volatility, it is extremely difficult to predict what kind of market underwriters are going to face this year. IE