(Bloomberg) -- Amid a dearth of new share sales in Canada, the listing of two major energy businesses, including the company that runs the Keystone pipeline, on the Toronto Stock Exchange will turn out to be a relative disappointment, simply leaving investors wanting more.

TC Energy Corp. announced on July 28 that it will spin off its liquids business, which includes the Keystone pipeline and Keystone XL project, while private Strathcona Resources Ltd. said Tuesday it is listing its own shares on the Toronto Stock Exchange.

Problem is, Strathcona is selling only a fraction of its total equity, while TC Energy is filling its slow-growing liquids unit with debt before the sale, making both less attractive to investors. That means the two deals are unlikely to transform the Canadian equity financings market. Companies have raised just $5.4 billion through initial public offerings and secondary listings in Canada in the first half of 2023, down 54% from a year ago.

“It’s a missed opportunity,” Eight Capital analyst Phil Skolnick said of Strathcona Resources’ decision to sell just 9% of its equity at a time when there’s interest in the space. “You’re not going to get a lot of the big investors because the float is not large enough.”

Strathcona, which describes itself as Canada’s fifth-largest oil producer, announced plans to go public through a reverse takeover on Aug. 1, acquiring Pipestone Energy Corp. in an all-stock deal that values the combined entity at $8.6 billion.

But plans to list only 9% of the shares, means that only about C$774 million of Strathcona’s total equity value will trade on the exchange — roughly in line with Pipestone’s valuation before the deal was announced. Pipestone shares plunged 13% combined on Tuesday and Wednesday before stabilizing somewhat on Thursday. 

In the case of TC Energy, the new liquids company will also issue about C$8 billion in debt, with the proceeds going to the parent company. That is hardly a recipe for attracting investors. 

The unit generated C$1.4 billion in Ebitda in 2022, which is expected to grow only slowly to about C$1.5 billion by 2026, according to BMO analyst Ben Pham, who said in a note he is “doubtful” the spin-out will trade at a healthy valuation.

“We are not yet convinced the separation will add value,” Pham said in a note that downgraded TC to market perform from outperform and slashed the price target to C$55 from C$60.

To be sure, now that oil and gas prices are rising the two listings signal the extent of investor interest in Canadian markets — and in the country’s energy sector in particular.

“It will get the eyes and attention of a lot of new investors that have been away from the Canadian markets for a while,” Raymond James analyst Jeremy McCrea said, noting that either listing would be the largest energy company to go public in Canada in years — potentially since Encana Corp. spun out PrairieSky Royalty in 2014.

--With assistance from Stephanie Hughes.

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