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J. Ari Pandes is an associate professor of finance at the University of Calgary’s Haskayne School of Business. Bryce C. Tingle, KC, is the N. Murray Edwards Chair in Business Law at the University of Calgary’s faculty of law.
In 2021, 33 operating companies each had an initial public offering on the Toronto Stock Exchange. Pundits proclaimed, “The IPO market is back!” What a difference a year makes. To date in 2022, only one operating company has joined the TSX, and it was really a secondary sale related to a spinoff.
The stark drop in the number of IPOs this year is no surprise to us. This reflects not just wider economic conditions of higher interest rates and talk of a looming recession.
The reality is that the IPO market has been quietly declining for some time, which we first documented in a 2013 research paper, followed by another research paper in 2021 with updated data.
We noted that from the period 1993 to 2000, the TSX had an average of 41 IPOs a year, and in the period since, 2001 to 2021, there have been an average of just under 15 IPOs a year. The best years since 2000 did not come within striking distance of beating the average number of IPOs in the 1993-to-2000 period.
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