Canada’s market for initial public offerings may be preparing for a comeback after a years-long dry spell, as industry insiders say the number of large companies looking to list is on the rise.

Montreal fashion retailer Groupe Dynamite launched its IPO earlier this week with a $2.3-billion valuation target, pricing its shares between $19 and $23. And it’s not the only Canadian firm that may be eyeing going public.

The CEO of Montreal materials-technology company SRTX recently hinted at The Logic Summit that it might consider an IPO, as it seeks “to build a multi-hundred-billion-dollar company here in Canada.” And, Canadian pharmaceutical company Apotex hired banks to prepare for a public offering, Bloomberg reported earlier this month.

“It’ll be bigger deals coming to the market,” Daniel Nowlan, vice-chairman and managing director of equity capital markets at National Bank, said in an interview. “This has been rolling for a few months now.”

Around the middle of this year, Nowlan said the bank began having more in-depth conversations with potential Canadian issuers, spurred by secondary treasury deals and IPOs in the U.S. That includes Michigan logistics company Lineage, which debuted on the Nasdaq in July and raised US$4.4 billion in the biggest offering of the year. Now, Nowlan said he’s starting to see Canadian companies begin marketing or talking about going public. 

The S&P 500’s relatively low volatility over the past year has also bolstered confidence in going public, Nowlan said. He pointed out how the Cboe Volatility Index, or VIX, which measures the S&P 500’s expected volatility over the next 30 days, has mostly been in the teens this year. When the VIX, often referred to as Wall Street’s “fear gauge,” is above 30, there tends to be fewer IPOs. Donald Trump’s election win gave the markets a decisive result, Nowlan said, easing volatility further.

There’s also been a “lot of money sitting on the sidelines,” he said. That includes cash and near cash, like money market funds, which are short-term mutual funds. In the U.S. there are around US$6.59 trillion in money market funds, eclipsing the entire Canadian market of $4.2 trillion. Nowlan said U.S. investors are keeping tabs on larger deals coming to the Canadian market, and would be ready to jump into Canadian larger cap issuers.

“There are signs that the IPO market is poised for a comeback as conditions normalize; companies are ready to go when the time is right,” Catherine Kee, a spokesperson for TMX, which operates the Toronto Stock Exchange and TSX Venture Exchange, said in an email.

PitchBook’s venture capital exit predictor indicates that currently over 40 Canadian companies would have a higher than 50 per cent chance of going public. SRTX is one of the firms on that list.

The potential Canadian IPO comeback may arrive after a relative slowdown in the past few years. Shareholders had been considering private equity and secondary markets instead, and it’s been a “sluggish” exit market, according to an EY report released in the third quarter of 2024. The number of companies that went public that quarter dropped 13 per cent in Canada from the same time last year, while it increased by 29 per cent in the U.S.

“The last little period has been a little bit of an anomaly in that our IPO market has really gone very silent while [the U.S. has] kept going,” Nabeel Pabani, EY’s Western Canada audit leader, said.

The stagnant period came after a boom in Canadian tech listings during the pandemic, when some companies got ahead of themselves. Many of those firms are currently trading at “significantly lower values than they went public at, or they’re still trading—but way underwater,” Pabani said.

Some other Canadian tech companies in that IPO class are now exploring options including a sale—like Lightspeed and Kinaxis. 

Kee added that there have been “substantial” companies that debuted on the TSX in listings other than IPOs, including Calgary pipeline firm TC Energy’s spinoff of South Bow last month. There have also been some corporate IPOs on the TSX Venture Exchange, she said.

Pabani said he’s seen increased interest from companies in going public via IPO, but the discussions are more measured than during the 2021 boom and focused on long-term profitability. Companies have been waiting until their business models are more developed before considering listing on the public markets.

“What people are really focusing on now is: if we’re going to go public, we want to go public as a profitable entity,” Pabani said. And if the market really takes off in the U.S., Canada could be along for the ride, he added.