Bankers and attorneys expressed hope for a rebound in Canadian equity capital markets (ECM) issuance following Enbridge’s recent C$4.6 billion capital issue and a slew of new U.S. agreements.

Refinitiv statistics show that in the third quarter of this year, Canadian ECM issuance reached a two-year high of C$6.7 billion ($5 billion) because of Enbridge’s jumbo stock sale to fund a portion of its acquisition of three utilities from Dominion Energy (D.N).

François Carrier, co-head of Desjardins Capital Markets, asserted: “I think there is proof out there that for the right deal for the right reasons, investors will turn up.

“Our team is definitely discussing a gradual market opening between now and the end of the year, and we’re definitely more optimistic going into 2024 in terms of what is feasible,” he continued.

According to Refinitiv statistics, Canadian IPOs in 2022 totaled C$1.6 billion, a three-year low, while Canadian ECM issuance reached a more than 22-year low of C$13 billion in 2022. Canadian ECM issuance is now at C$201.7 million for the year’s first half.

But in recent weeks, with a flurry of fresh, substantial bids in the United States and Enbridge’s transaction, optimism has grown.

Recently, the marketing automation companies Arm Holdings (ARHL.BO), Instacart (CART.O), and Klaviyo (KVYO.N) have made their debuts to brisk initial demand. Enbridge’s stock was trading 1.8% higher on Monday than on September 8 when it was first put on the market.

This has given market investors reason to believe that IPO demand, which had been severely impacted over the previous two years by the pandemic, geopolitical unrest, and interest rate increases, maybe on the upswing.

According to Jeff Hershenfield, co-head of the Capital Markets and Public Mergers & Acquisitions Group at law firm Stikeman Elliott in Toronto, “there is a long list of companies out there that have been doing quite well over the last while and that are starting to dust off their IPO plans and their work plans to reinvigorate the process.”

According to Stephen Pincus, a partner at the Goodmans law firm’s Toronto office, market players hoped an IPO window would open sometime in the upcoming months.

According to CEO John McKenzie in a recent interview, the primary operator of Canada’s stock market, TMX Group (X.TO), has around 1,600 companies in its pipeline for initial public offerings (IPOs), with over half being technology firms.

However, few dealmakers anticipate a surge in supply given the turbulent secondary equities markets caused by the uncertain macroeconomic situation.

Following a good first-day opening, the post-sale performances of Klaviyo, Arm, and Instacart shares also declined.

The shares fell far from their first-day high, possibly impeding a revival of Canadian IPOs and equity capital raising.

According to Neil Selfe, founder and CEO of advising INFOR Financial Group, “the market is actually significantly better than it was six months ago, but we are not out of the woods yet and investors generally are still not receptive to hearing about riskier earlier stage stories.”

“We need sufficient information to declare the IPO market open. He continued that a healthy IPO market is still 12 to 18 months away.