09:36 AM EST, 03/07/2024 (MT Newswires) -- Canada's biggest market for initial public offerings is marking a grim milestone of a full year without a new listing, and with investors focused on a narrow set of themes, senior bankers don't expect relief before the second half of 2024, Geoffrey Morgan at Bloomberg News is reporting Thursday.

Morgan noted the Toronto Stock Exchange is in the middle of an historic drought for IPOs; the last company to debut on the country's premier venue was Lithium Royalty Corp. ( LITRF ) raised $150 million. The lack of new listings is raising concerns about the health of Canada's equity markets as a place to raise capital, Morgan added.

"If Canada had an AI-related IPO, I'm sure it would fly off the shelves but it's just that our economy isn't focused on the sectors where investors want to put their money," said Grant Kernaghan, head of Citigroup Inc.'s Canada markets unit. Canada has yet to develop the breadth and depth in the technology, pharmaceutical and health-care sectors that exists in the U.S., he added.

Morgan noted exchanges in the U.S. are seeing renewed activity in sectors investors want. Companies there have raised US$7.2 billion via IPOs this year, with consumer names like Wilson tennis racket maker Amer Sports Inc.'s US$1.6 billion offering and health care firm BrightSpring Health Services Inc.'s US$693 million IPO among the five largest, according to data compiled by Bloomberg.

"If you look at the IPOs that are happening in the U.S., they aren't in energy, they aren't in mining, they aren't in banking and insurance," Kernaghan said. "That's three-quarters of the Canadian listed equity market."

According to Morgan, diversification has been a challenge for Canadian markets for years, even as a handful of technology companies have successfully scaled up in the country, including Shopify Inc. ( SHOP ) and Constellation Software Inc. ( CNSWF ) . Still, he noted, technology stocks make up just 8.6% of the S&P/TSX Composite Index, compared with the sector's nearly 30% weighting in the S&P 500.

Even on Canada's junior exchanges, new stock issuance has been bleak. So far in 2023, one blank check company, Navion Capital II, has debuted and raised just $250,000, Morgan noted.

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