The number of Canadian initial public offerings (IPOs) on AIM, a market operated by the London Stock Exchange (LSE), continued their steady pace in the second quarter of 2007, according to the Canadian AIM IPO survey released today from PricewaterhouseCoopers (PwC).
There were three new listings in the second quarter compared to two in the first quarter and on par with three in the same quarter last year.
“The continued listing activity of Canadian companies is indicative of their solid interest in the AIM market as a good source for capital especially in the technology sector,” says Ari Sahakian, a Director with PwC’s Transaction Advisory Group.
Overall, AIM IPO activity declined in the second quarter of 2007 (65) compared to the second quarter of 2006 (89), according to the PwC IPO Watch Europe Survey, Q2 2007. TSX activity also slowed in the second quarter of 2007 with only eight IPOs versus 18 in the same quarter of last year. Interestingly, the TSX Venture showed an increase with 10 IPOs in Q2 2007 up from five in the same quarter last year which suggests that the source and size of placements is changing to markets like AIM and the Venture exchange.
Of the three new AIM listings in Canada during Q2 2007, two were in the Technology sector – Versatile Systems Inc. and Dragonwave Inc. The total amount raised by these two Canadian companies was £15.4 million, a decrease over the prior quarter of £70.0 million. The third listing (Stratic Energy Corp.) was an introduction only and did not raise new capital.
“We may be seeing a trend here with more and more technology companies choosing to list on AIM,” says Ben Kaak, PwC Partner, and National Technology Practice Leader. “Not only is the AIM seen as an increasingly important financing market for Canadian technology and media companies but a listing also helps to raise the profile of Canadian companies in their European markets.”
The total number of Canadian AIM listed companies slipped to 41 at the end of June 2007, as six companies (all in the energy and mining sectors) de-listed from the AIM exchange during the quarter, as they either moved to the LSE Main Market or were acquired. Sahakian notes, “These de-listings from AIM show that Canadian companies are growing or attracting the attention of bigger players in their industry as takeover targets.”
The total market capitalization of Canadian AIM listed companies at June 30, 2007 was £5.4 billion, a decrease of 50% from £10.8 billion at March 31, 2007, primarily as a result of the de-listing of large mining and energy companies during Q2 2007 including, Oilexco Incorporated, First Quantum Minerals Limited and Yamana Gold Inc., who all started trading on the LSE Main Market in the quarter and had a combined market capitalization of £5.1 billion at March 31, 2007.
“We’re seeing some interesting trends with the change in profile of Canadian AIM listed companies,” says Sahakian. “With the addition of Versatile Systems Inc. and Dragonwave Inc., Technology & Media companies now total nine and represent 22% of the total Canadian AIM listed companies at June 30, 2007, second only to Mining at 41%, in terms of number of listings.”
The overall performance of the 41 Canadian AIM listed companies at June 30, 2007, increased 24.8% during Q2 2007, with five out of the six industry groups advancing. The top performing industry group was Mining at 34.4%, while the Financial Services sector declined 1.1%. The Technology & Media sector advanced 24.6% during the quarter and 36.0% year to date.