March 31, 2021
Subs -
WE ARE LIVE.
Qualified Canadian Readers Only.
As the first quarter of 2021 comes to an end, I reminisce on what was. There are certain sectors that thrive in a new issue market. The first being investment banking revenues, the second being a weekly blog highlighting transactions and new issues. Thankfully, because of my lack of appearance at bars after work, I can re-direct what was once yelling into a colleague’s ear, into a weekly note. No shortage of content.
New issue activity remains muted across the street - with notable mandated IPOs and RTOs being delayed at least a quarter. Volatility and bond yields remain front and centre.
As go-public deals continue to drag on, it’s important to consider some of the benefits of a delay - specifically relating to purchaser lock-up periods. The lock-up period for a go-public (depending on exchange and transaction) is typically 16 weeks. As deal teams continue to delay listings, sub receipt buyers are reaping the benefit as the lock-up period naturally shortens. For a typical RTO transaction, the issuer would close its private placement in week 5, and list its shares in week 12-13. As listings delay, trading risk is significantly reduced. And as volatility continues across markets, institutional and retail investors tend to steer clear of any form of lock-up.
To demonstrate first hand just how slow things are getting on the new issue front, over the past week, several issuers revised terms (not including the deals that have been delayed):
MDA Ltd. was out to market with a $500M IPO of commons, pricing in a range of $16-$20. The terms have been revised to reflect a base raise of $400M and price talk at the bottom of the range, $16. The IPO is being led by BMO and Morgan Stanley.
Sol Cuisine was out to market with a $20M RTO of sub receipts. Raising capital in a highly momentum driven sector, plant-based foods. The terms have been revised to reflect a $15M base. The deal is being led by Canaccord.
Several months back we were in a market where every greenshoe was exercised in full. Today, agent’s are foregoing their option - seen most recently across Slate Grocery and Telus Corp’s financings.
I will continue to monitor the market and update you guys through my Twitter.
Lastly, in early February Bloom Burton and Richardson Wealth announced a strategic relationship, opening the flood gates for Bloom Burton to access a $30B distribution channel. This week we got a glimpse into that relationship. iCo Therapeutics Inc. announced a $6M RTO financing - the deal is being led by Bloom Burton and Richardson Wealth. We shall see how the deal/listing progresses given the current market.
ECM World
Top 5 Notable Transactions
iCo Therapeutics Inc.
C$6M RTO of sub receipts
BB lead w/ RW
Giga Metals Corp.
C$7M public offering of units (commons + ft + wts)
Cantor lead w/ CG, EWP, Haywood
Quisitive Technology Solutions
C$50M bought of sub receipts
Scotia lead w/ 8Cap, CG
C$5M concurrent PP of sub receipts to Fax Capital
Slate Grocery REIT
C$133M bought deal of sub receipts
BMO lead w/ RBC, CIBC, NBF, Scotia, TD
Ascot Resources
C$55M bought of commons
BMO lead w/ RJ
Cheers,
G.G.
Great image & caption! Thanks for the humour to go along with the facts.