“I’m not surprised, necessarily, given that the macro backdrop has just changed so dramatically versus a few months ago,” said Moschopoulos. The interest-rate changes, global uncertainty and risk of recession all influence what investors are willing to pay for a stock.Article content
“When things are more uncertain, investors tend to get more defensive,” he said. They rebalance their portfolios and rotate out of higher-growth, innovative tech stocks and into more defensive parts of the economy. As oil pricesSome of the Class of 2021, however, have fared better. Of the five gainers, Waterloo-based digital-investigation software firm Magnet Forensics leads, up roughly 65 per cent from its April 2021 offering price of $17.00 to $28.10 at the end of the first quarter.
Despite a lack of IPOs in the sector, other kinds of listings not so tied to the current macroeconomic climate continue to take place, said Lipkin. “A good number of innovation companies” went public this year through other methods, such as qualifying transactions, where a capital-pool company acquires the firm going public.
In the first quarter of 2022, four innovation-economy companies listed on the Toronto Stock Exchange through a non-IPO transaction. On the TSX Venture Exchange, a dozen did so, with the majority through qualifying transactions. Together, those show “a good pace relative to the historical number of companies that would go public in a full year,” Lipkin said.Article content
Qualifying transactions “have more of an ability to time their financing,” he said. They provide a longer period of time to raise money, hold it in escrow and complete a transaction compared to an IPO. “There’s just more wiggle room to do the financing overall when there can be tougher marketing conditions overall across the board.”Several Canadian companies were expected to IPO in late 2021, but delayed their plans as conditions changed.