Canada's 2007 IPO market worst in years - survey

TORONTO, Jan 7 (Reuters) - Canada's market for initial public offerings had its worst year in 2007 in six years, amid volatility in the stock market and the continued impact of changes to income trusts, a survey showed on Monday.

A total of 90 IPOs were listed on the Toronto Stock Exchange and the TSX Venture in 2007, worth about C$3.4 billion, compared with 109 new issues worth C$5.6 billion in 2006, according to an annual survey by PricewaterhouseCoopers.

A C$1.1 billion IPO by Franco-Nevada Corp (FNV.TO) in the fourth quarter lifted 2007's value up from C$2.3 billion, which was only slightly higher than 2001's C$2.1 billion.

On the TSX, there were 36 new issues worth C$3.0 billion, down from 54 IPOs worth C$5.4 billion in 2006. Meanwhile, on the Venture, 54 new issues worth C$382 million were listed, with 15 of them recorded in the last quarter of the year. In 2006, there were 55 new issues worth C$250 million.

Despite a strong fourth quarter, 2007 was the worst year since 2001, when there was an all-time recorded low for the previous decade.

"The environment in 2007 was anything but predictable and stable," said Ross Sinclair, national leader of PwC's IPO and income trust services in a release.

"The impact of the loss of income trusts in the market was felt most of the year, as potential issuers tried to chart a course for the future. At the same time, there were wild swings in the market - volatility over weeks and months that makes pricing a new issue almost impossible. And finally, the uncertainty in the credit markets left many participants distracted and alarmed."

Canadian income trusts will be fully taxable beginning in 2011. The trusts have been free from corporate taxes as long as they distribute most of their cash flow to investors. The Canadian government decided on Oct. 31, 2006 to end that break.

Activity in the mining, energy and related sectors kept the year from being worse, and highlighted trends that could be seen in 2008, Sinclair said.

($1=$1.00 Canadian) (Reporting by Leah Schnurr; Editing by Bernadette Baum)