Aritzia IPO dominates worst year in decades for Canadian IPOs

Fashion retailer generated $400 million in its October IPO

Aritzia CEO Brian Hill and investor Berkshire Partners sold their own shares in the company's October IPO so the company itself did not net any proceeds from the offer | BIV archives/Chung Chow

Vancouver fashion house Aritzia Inc. (TSX:ATZ) was by far the largest initial public offering (IPO) on the Toronto Stock Exchange in 2016 and was a bright spot in what was the worst year since 1996 for IPOs, according to a PwC survey released January 3.

The $400 million Aritzia IPO in October was one of just three new issues on the TSX during the entire year and was one of only eight new issues on all exchanges in Canada during 2016, according to PwC’s survey on IPOs.

The Aritzia IPO did not result in the company receiving any proceeds of the offer, however. Investors Berkshire Partners LLC and Aritzia founder and CEO Brian Hill, instead sold their subordinate voting shares. Hill and Berkshire Partners continue to hold control of the company by keeping shares that have multiple votes.

The three IPOs on the TSX in 2016 made the year the worst for IPOs in the 20 years in which PwC has produced its annual survey. Two other small issues on the TSX in the final months of the year brought the quarterly and annual tally for Canada’s senior stock exchange to $464 million, according to PwC.

Five issues on the Canadian Securities Exchange (CSE), totalling $2.6 million, brought the 2016 full-year total on all Canadian exchanges to $466 million.

That compares to 2015, when there were 22 issues with a value of more than $3.9 billion on all exchanges. IPOs on the TSX big board were worth $3.9 billion in 2015.

PwC’s national IPO leader, Dean Braunsteiner chalked the weak year up to:

•a hangover from the European debt crisis;

•the shock of the Brexit vote in the U.K.; and,

•uncertainty from the U.S. presidential election campaign.
He expects a better IPO market in 2017

“The IPO market always lags the traditional equity market,” Braunsteiner said.

“Markets in Canada and the U.S. have marched higher since the U.S. election. Companies considering an IPO are watching that steady upward trend like everyone else. They won’t want to get left behind.”

Some companies that may launch IPOs in 2017 include Vancouver's Hootsuite and Vision Critical as well as other Canadian companies, such as healthy-fast-food franchisor Freshii Inc. and a Fairfax Financial Holdings spinoff, Fairfax Africa Holdings Corp.