Canadian IPOs seen picking up as crisis eases

By Pav Jordan - Analysis

TORONTO (Reuters) - The dry spell for Canadian IPOs has started to ease as investors cautiously return to the market for new equity issues after the global financial crisis kept many of them out of harm's way over the past year.

In the past week three companies came to market with well-received initial public offerings, and bankers see more on the near horizon. The fresh appetite for risk has slowly surfaced in tandem with an overall rise in stock prices during the spring.

Most of the Canadian new issues are likely to be in the mining and energy sectors due to strong commodity prices. But no matter what the industry, guaranteed revenue streams are likely to be a common denominator for the coming IPOs, experts say.

"You definitely saw over the past year a lot of cash moving to the sidelines, moving into government debt and other fairly low-return but stable investments, and now I think it has been moving back into the markets," said Nick Einhorn, a research analyst at Renaissance Capital, a U.S.-based IPO think tank.

Last week Canada's Magma Energy Corp, a geothermal power company active in the western United States and South America, raised C$100 million ($86 million). The offering was briefly the biggest in Canada in 13 months.

It was topped twice on Monday, first by a Capital Power Corp IPO priced to raise about C$500 million, and then by mortgage insurance company Genworth MI Canada, which priced an offering to raise some C$850 million.

"All three of these transactions show that there is money to be deployed for quality names," said David Skurka, an investment banker at Bank of Nova Scotia (BNS.TO: Quote, Profile, Research), which co-led the Genworth deal.

Shares of all three companies will begin trading next week.