April 7, 2021
WE ARE LIVE.
Qualified Canadian Readers Only.
Hello lockdown, my old friend.
As Mr. Ford continues to play with the emotions of my Ontario peers through the constant indecision to re-open and re-close non-essential services, appetite for new issue products continues to dampen. On the bright side, I can finally sniff summer.
At this point, I feel like a squawk box in need of repair. But yes, expectations for heightened forward volatility in conjunction with a “high” yield environment spells bad news for equity desks. These are scary hours for Canadian ECM, indeed.
Take Exchange Income Corp., for example: a company whose name is so uncreative and business so boring, that you might have mistaken it for Sleepy Joe. Exchange hit the market after-hours yesterday with a $80M bought deal of commons. The syndicate of dealers was led by National and CIBC. Unfortunately, even with 12 dealers receiving economics, the book was only 90% covered. A good reminder that despite value-add, issuers feel the need to keep their bankers happy - even if those bankers just call occasionally with obscure ideas.
Elsewhere, rare earth miner Neo Performance Materials was out to market with a $75M bought deal of commons. The deal is led by the folks at Paradigm, and again is undersubscribed. Neo is a Paradigm darling - helping to keep the lights on at the shop as it continues to tap the market. As RBC continues to climb the syndicate lines for NEO’s offerings, it’s inevitable RBC will eventually steal the show. Truly sad to see a bank compromise an independent’s 5% cash commission. Stay nimble, Paradigm.
It hasn’t been all that bad, though. Andrew Bowering and Prime Mining Corp. came storming in with a $25M bought deal of units. Hailing from Vancouver, Andrew is shaping up to be an up-and-coming tour de force in the mining world, having now founded 4 Venture-listed mining companies (ML, APGO, LI, and PRYM).
From my contacts on the street, I have yet to encounter someone who is not please with Mr. Bowering’s work…he has made many Canadians quite wealthy.
Top 5 Notable Transactions
Exchange Income Corp.
C$80M bought deal of commons
National lead w/ CIBC, Laurentian, RJ, RBC, Scotia, TD
Prime Mining Corp.
C$25M bought deal of units (1sh+ ½wt)
Desjardins lead w/ TD
Lendified Holdings Inc.
C$5M best efforts of sub receipts
Neo Performance Materials Inc.
C$79M bought deal of commons
Paradigm lead w/ RBC, CG, Cormark, RJ, Scotia, Stifel
Arizona Metals Corp.
C$18M bought deal of special warrants
Stifel lead w/ Clarus, Cormark, Beacon, Agentis