Increased retail market participation and stronger valuations have been supported by new issues, particularly in mining and technology, leading the Canadian Securities Exchange to have a record year in 2020; leading the firm to a positive outlook for the anticipated post-pandemic market later in 2021, says Barrington Miller, head of issuer engagement at CSE.
Dan Barnes Welcome to Primary Markets TV – your update on new issues in the equity and fixed income space. I’m Dan Barnes. Joining me today is Barrington Miller, head of issuer engagement at the Canadian Securities Exchange. Barrington, welcome to the show.
Barrington Miller Thanks for having me. Pleasure to be here.
Dan Barnes So tell us what’s been driving appetite for IPOs at the CSE this year?
Barrington Miller It’s a combination of increased retail participation in Canada’s junior equity markets, both from a secondary market in trading and participation in that perspective, as well as the support from the initial offerings. Combining with stronger valuations in a number of sectors that are well represented in the junior markets; mining, precious metals, base metals, rare earths and doddery or green metals, life sciences and health tech for obvious reasons, a little bit of cannabis, psychedelics, e-gaming, gambling, tech and FinTech, especially with block-chain crypto angle. All of these industry sectors rely on retail support for distribution following the going public transaction.
Dan Barnes And how have new issues compared to previous years in terms of the industries you’re seeming engaged with and the size of issues.
Barrington Miller Well, I think between 2019 and 2020 it will tell the whole story. Cannabis represents a lower percentage overall of money raised while mining and the tech sector have increased substantially.
Dan Barnes And have you seen investor appetite matching the issuers’ appetite?
Barrington Miller From our point of view, the pipeline of strong US cannabis issuers have been tapping into the secondary market offering, in anticipation of M&A activity and organic growth opportunities as more and more US states move to adult rec use policies, as well as the mining story in sectors that did well last year. And of course, we will be coming out of this pandemic and COVID-19 in a very, very positive manner.
Dan Barnes That’s great. And so how do you expect the rest of the year to look for you?
Barrington Miller I think the rest of the year is going to continue to be hot, not only in the sectors that we’ve discussed, but the housing market in our areas have been phenomenal and we will continue to see that. And again, not only housing, but the condo market, because everyone is leaving the city needing to get out, but condos at an all time low, so they’re now investment properties. When you combine that with the cannabis sectors, and mining and mineral sectors, and the housing market, I think it’s going to be up, up and away.
Dan Barnes That’s fantastic. Barrington, thank you so much.
Barrington Miller Thanks for having me.