EY figures are more confirmation of moribund merger and acquisition volume.
HALIFAX – You could almost recycle last year’s EY reports on mining mergers and acquisitions (M&A) to represent deal flow during the first half of 2015.
Which isn’t knocking EY. Just to say that mining M&A is still in the dumps.
As EY put it in their recent report on mining, “Overall activity in the 1st half of 2015 (H1 2015) remained subdued, following similar levels of malaise in 2014.” In fact, in some important ways, this year is worse off than last. EY was dead on describing IPO activity as flat-lining in the first half of 2015.
It looked dead last year. It’s deader now. Noting “persistently weak” IPOs in mining, E&Y data suggests the value of IPOs in the first half of 2015 is down 71% to $335 million from the first six months of 2014. The number of IPOs was also down to 6 from 8 and that says a lot.
It puts this year on track to “beat” 2014 as an IPO low in recent years. For measure, recall that IPOs in booming years like 2010 and 2011 were an order of magnitude higher and numbered 177 and 141 respectively.
The dearth of interest and ambition in mining continues to be deep set, in other words. In this regard, it’s also worth recalling who waded into the acid waters of mining IPOs this year. TMAC Resources, raising $109 million in an IPO and pursuing the Hope Bay gold project in Nunavut, accounted for about a third of the total IPO market value wise.
It’s no surprise it is backed by heavyweights like Newmont and Resource Capital Funds. Big IPOs in a market like this are not for dilettantes. And it takes at least a medium-sized, very-advanced mining asset, in this case, gold.
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