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Big stock sales have been getting done this year, but the Canadian market has had trouble digesting many of them.

Companies raised $26.9-billion in 214 equity transactions during the first six months of 2017, according to data compiled by Thomson Reuters. That's a modest decline in proceeds from the first half of last year, but a sharp increase in the number of deals. In 2016, issuers tapped the Canadian stock market for a record $51.4-billion in 353 deals, according to historical data, with 157 of them occurring during the first six months.

Businesses in the energy and power sector flooded the markets with shares, raising $13.9-billion by issuing stock. That's 52 per cent of the country's total equity proceeds for the first half.

Four of this year's new stock issues were for proceeds more than $1-billion, including Kinder Morgan Canada Ltd.'s initial public offering for $1.75-billion and three bigger bought deals in the energy sector by Cenovus Energy Inc., Hydro One Ltd. and AltaGas Ltd. Shares of all four companies were trading below their issue prices as of Wednesday's close, illustrating just how choppy stock markets are today – even for share sales tied to blockbuster acquisitions or major projects.

"Equity new-issue volumes in the first half of the year were at last year's record pace," said Sante Corona, head of equity capital markets at TD Securities, which led the group by being the main underwriter on stock sales in the second quarter. "But after-market performance of recent offerings has been mixed."

Near the start of 2016, back when stock markets were declining and oil prices were really in the tank, companies were selling their shares at lofty discounts to where their stocks were trading at the time in order to get these deals done. Then, the market recovered and turned bullish, resulting in more deal flow, bigger financings and tighter pricing terms. Now, it seems the new issue market is taking a breather and is looking for wider discounts or deal sizes to shrink.

During the first half of 2017, TD was a bookrunner on 31 stock sales for $4.2-billion in proceeds. But it wasn't enough to dethrone RBC Dominion Securities, which led 30 equity deals for $5.7-billion. RBC also claimed top spot for bringing IPOs to market, earning credit for helping five issuers raise more than $1-billion.

After IPOs nearly dried up last year, new listings have roared back to life in 2017, giving investors a roster of new names to add to their portfolios.

IPO activity has already surpassed the annual average of the previous five years. During the past six months, there have been 10 corporate IPOs that each have raised more than $100-million for $3.5-billion in total proceeds, according to data compiled by CIBC World Markets.

New consumer listings Freshii Inc. and Canada Goose Holdings Inc. were snapped up by investors and have traded higher since going public. But they haven't all been home runs.

Kinder Morgan Canada, STEP Energy Services Ltd. and Source Energy Services Ltd. listed their shares during a prolonged oil glut. Tech stocks Real Matters Inc. and Zymeworks Inc. also started trading. Today, shares of these five companies are currently trading below their IPO prices, suggesting that issuers, their underwriters and investors may not be on the same page in terms of pricing.

Many of the big-ticket stock sales hit the market to finance acquisitions. In the first half of the year, investment bankers worked on $120.5-billion worth of mergers and acquisitions involving Canadian companies, 12.5 per cent more than the same period in 2016.

JPMorgan earned top spot for M&A financial advisers, working on 15 deals worth $44-billion, according to Thomson Reuters. TD came in second, advising on 34 tie-ups worth $35.8-billion. Osler Hoskin & Harcourt LLP finished in first for law firms, advising on 56 transactions worth $35.1-billion.

Where Canadian deal-making activity goes from here largely depends which way oil prices swing.

Companies issued $32.8-billion in debt in Canada during the first six months of the year, a 45-per-cent increase from the same period last year. RBC topped the corporate debt tables, leading 40 new issues to market for $8.4-billion in proceeds.

With files from Jacqueline Nelson

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 21/11/24 4:00pm EST.

SymbolName% changeLast
H-T
Hydro One Ltd
+0.77%45.54
ALA-T
AltaGas Ltd
+1.59%35.21
CVE-T
Cenovus Energy Inc
+0.09%22.64
GOOS-T
Canada Goose Holdings Inc
+1.69%13.25
STEP-T
Step Energy Services Ltd
-0.4%5.02
SHLE-T
Source Energy Services Ltd
-1.27%17.85
REAL-T
Real Matters Inc
-5.49%6.37

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