A new stock market survey from PricewaterhouseCoopers shows that initial public offerings have surpassed activity levels of the heady market years of 1999 and 2000, and in terms of total value have almost equaled the banner year 2000.

According to the survey, 51 IPOs, worth $4.2 billion, were successfully placed in the Canadian market between Jan. 1 and June 30, despite the poor performance of the overall market in the first half of 2002.

That’s a 59% increase over the number of IPOs (32) brought to the market in 2001 and 180% over the value ($1.5 billion). In the first half of 2000, there were 44 IPOs worth $4.4 billion; in 1999 it was 40 IPOs worth $2.1 billion.

“While the overall market struggles, the IPO market has quietly bounced back,” says Eric Slavens, IPO services leader for PricewaterhouseCoopers in Canada.

The survey breaks down IPO activity into nine market segments: financial services, life sciences, mining, oil and gas, products (including consumer and industrial products), real estate, structured products (investment vehicles created to acquire a portfolio of existing equity, bonds or other financial instruments), technology and media (including telecommunications and entertainment) and other (including transportation, environment, pipeline and utilities).

Slavens says the key to IPO strength so far this year has been a swell of successful offerings of income trusts — they accounted for 94% of the total value of IPOs, excluding structured products. These are offerings in which investors buy trust units in a given asset base or business unit rather than purchase shares of the company. These IPOs are perceived by investors to be more stable, with fairly high-expected rates of return built into the mandatory distributions of the income trusts. They also offer tax advantages because they avoid the payment of corporate taxes and defer the payment of the investor’s personal income taxes.

Slavens says that investors’ enchantment with income trusts should be balanced with prudence. “It’s a given that investors should be fully informed before they buy in any market. However, it’s worth reiterating that income trusts, like any investment vehicle, are tied to the financial performance of the assets they happen to be built on. If the assets do not perform, that will ultimately be reflected in future distributions of the income trust and the market value of the units.”

There is also a lesson in the 2002 market, Slavens says, for companies considering offering an IPO to investors. “The IPO market has been somewhat volatile for several years. It has advanced and declined quickly, and 2002, so far, hasn’t been an exception. Because it takes time to complete an offering, it is wise to be ready to move quickly and take advantage of the upward swing. There may not be much warning for an organization with an IPO in the works.”

According to the survey, the hot spot for IPO activity in the first two quarters was structured products with 21 offerings completed, worth more than $1.9 billion. That was double the pace at the same point in 2001 when there were 10 structured products, worth $1.4 billion.

In the products sector, there were 10 IPOs versus one the year before, of which seven were income trusts. The total sector value was $969.4 million, up from $2 million in 2001.

In financial services, there were no IPOs brought to market compared to three at this point in 2001. Activity and value declined in life sciences with only one offering versus three during the same period last year. The gross value of the lone IPO was $15 million versus $25 million in 2001.

The mining sector was more active, with eight offerings, one more than the year before. Value advanced dramatically to $229.3 million, up from $4.4 million at the halfway mark in 2001. Most of the value was contained in one IPO, however, a $225-million offering by Noranda Income Trust.

The pace of IPO activity declined 75% in the oil and gas sector, with one offering compared to four in 2001. Gross value was $4.2 million, down from $9.8 million the year before. In real estate, there was one IPO, worth $66 million, versus none a year ago. Activity in the technology and media, there were four offerings, same as last year; gross value advanced substantially to $392.2 million, up from $17 million in 2001. In the “other” sector, there were five IPOs versus none last year, worth $597 million.