Going Public in Canada

The idea of going public in Canada is based on two trends: 1) North American investors desire access to high growth equity opportunities not available domestically and 2)Indian companies are expanding rapidly and may seek international capital and business development opportunities to support growth. Companies looking to go public outside of India commonly look to the AIM in the UK or NASDAQ in the USA. Canadian markets have strength in certain core sectors (mining, cleantech, technology and energy) as well as excelling at serving small and mid cap size companies. In addition increasing international exposure can also lead to further business opportunities for the parent corporation.

The opportunity available to a company that has businesses and relationships internationally is immense as banks, funds and investors look for international diversification outside of Canadian companies. There has been a push in recent years to bring international companies to the TMX. The opportunity continues to be an ever-present one – while only 141 of the 3,644 publicly listed companies on the TMX are domiciled outside of North America, 12 of the 158 new listings in 2010 are international. While only 4% of listings had been international, this number has grown to 8% already this year. At present there are 52 companies listed from China, 20 from Europe, 33 from Australia, 13 from South American and 11 from Africa.

The TMX has been very open when it comes to size of offerings on both the IPO and secondary fronts. To date in 2010, the average financing on the TSX has been $50.5M and $3.9M on the TSXV. The 10 IPO’s on the TSX through to April 2010 raised $3.46B.

Overall the TMX group is the #6 financing destination in the world with the TSX Venture for small cap companies averaging $7.5M and the TSX for larger caps averaging $815M. Of interest is that 32% of TSX issuers >$500M are interlisted on a US exchange. The TMX group has taken a leadership position in certain sectors including being the #1 financing destination for mining and energy, in the top 3 for technology and is looking to emerge as the leader for clean technology companies worldwide. From a regulatory standpoint, the TMX is among the world leaders, whereas the costs of listing are not, including not needing SOX compliance.