Royal Canadian Mint raises $600 million in gold fund IPO

Submitted by cpowell on 07:47AM ET Wednesday, November 23, 2011. Section: Daily Dispatches

By Tim Kiladze
The Globe and Mail, Toronto
Wednesday, November 23, 2011

Since the books opened three weeks ago, the initial public offering has raised $600 million. That technically makes it the largest IPO of the year. However, some may argue that because it's a retail product, you can't compare it to the likes of Gibson Energy Inc. or Parallel Energy Trust.

The Mint issued exchange-traded receipts that offered the buyers direct beneficial ownership of gold with no intermediaries, such as an asset manager or counterparty. The ETRs will be listed on the Toronto Stock Exchange in Canadian and U.S. dollars.

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While other gold fund offerings exist, retail investors gobbled this one up because its government backing adds extra safety, its holdings are 100 per cent physical and its management is only 35 basis points annually. (Investors who bought in the IPO will also pay sales commissions to their brokers.)

Toronto-Dominion Bank and National Bank Financial co-led the offering. Considering how successful it was, there’s a good change there will be more issues. Rival offerings such as Central Gold Trust and Sprott Physical Gold Trust have come back to the market, some quite often.