Record-breaking activity in initial public offerings (IPOs) in Canada slipped under the radar of most business watchers last year, says a new report.

The annual study by PricewaterhouseCoopers shows a total of 69 IPOs (excluding structured products) were successfully brought to market for a total value of $5.8 billion, compared to 46 IPOs the previous year at $2.1 billion.

An IPO is the first offering of a company’s securities to the public at large.

“By the end of December, the IPO market hit record levels in both the number of initial public offerings and in total IPO value. This seems to have gone unnoticed by many business watchers. However, the totals by year-end were truly impressive,” says Eric Slavens, IPO services leader for PricewaterhouseCoopers in Canada.

Slavens added that income trusts dominated IPO activity last year, representing more than 86 per cent of IPO value. The five top offerings in 2002 were SFK Pulp Fund ($414.8 million), TSX Group Inc. ($341.6 million), Bell Nordiq Income Fund ($324.4 million), InnVest Real Estate Investment Trust ($300 million) and Boralex Power Income Fund ($250 million). These companies represented activity in five different market sectors, and four were income trusts.

The figures do not contain statistics for structured products because those differ from other IPOs in that they do not represent new equity raised for operating companies.

The survey tracked IPO activity on the Toronto Stock Exchange and TSX Venture Exchange in nine market sectors: financial services, forestry, life sciences, mining, oil and gas, products (including consumer and industrial products), real estate, technology and media (including telecommunications and entertainment), and other (including transportation, environment, pipeline and utilities).

“Income trusts are being offered that represent the whole gamut of economic activity – from restaurants to fish processing,” said Slavens. “The return from those income trusts will be totally dependent on the performance of the businesses on which they are built. Investors now have many options when buying units of income trusts, but it’s important for investors to read the prospectus diligently, particularly the section on risks.”

The oil and gas sector recorded nine IPOs last year worth a total of $88.8 million, compared to 2001 in which eight offerings were placed for a value of $22.4 million. Harvest Energy Trust ($30 million) led oil and gas IPOs.

“IPO activity is a forerunner for the broader economy,” Slavens said, adding that understanding IPO activity provides important context for the markets.

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