A REMARKABLE YEAR IN THE PUBLIC MARKETS

Stock exchange board with numbers

The public markets in North America have seen records broken across many metrics this year. In the United States, the number of initial public offerings (IPOs) and financings have hit highs greater than in the last decade. As of mid-October, 434 companies had raised over US$157B through IPOs, compared to 264 IPOs in 2020 that raised a total of US$81B. 

The sector leading the IPO boom was healthcare with 38% of IPOs, followed closely by the tech sector at 31%. 

Probably the biggest story in the U.S. public markets this year has been the significant rise of SPACs. Special Purpose Acquisition Corporations have seen a staggering amount of new SPACs filed, capital raised in these blind pools, and the number of companies that have chosen to go public via a SPAC versus a traditional IPO or even the more recently used Direct Listings. 

What is most relevant to private companies considering going public in the coming year is the number of SPACs still looking for a deal – over 460 SPACs have yet to complete a merger.  

In Canada, records are also being broken on Toronto Stock Exchange (TSX) and its junior market, TSX Venture Exchange (TSXV). YTD September marked the best three quarters across many metrics on TSX especially in the tech sector. 

 KEY HIGHLIGHTS

-       Market cap of TSX and TSXV surpassed C$4 Trillion for the first time

-       Best YTD Sept on TSX & TSXV for capital raised since 2016 at C$43.3B

-       Best YTD Sept in the tech sector at C$11.4B raised; more than any other full year

-       Corporate IPOs were up 533% 

-       IPO Proceeds were up 51% compared to YTD Sept 2020

TSX typically welcomes 20-25 IPOs per year, but as of September 30th, there were already 68 IPOs completed, representing a wide range of sectors and deal sizes. 

One of the highlights of the Canadian market is the number of graduates from TSXV to the senior board, TSX. As of the end of September, 27 companies have graduated to TSX, the same number as the whole year of 2012. Since 2000, over 700 companies that started on TSXV have graduated to TSX. 32% of all current corporate TSX companies are grads and 20% of S&P/TSX Composite Index Constituents are grads.

For U.S. companies listed on TSX/V:

-       Market Cap - U.S. companies listed on TSX & TSXV reached an all-time high combined market cap (C$176B); up 58% in the last 10 years

-       New Listings - 100% year-over-year increase in new U.S. listings; best YTD Sept for number of new listings on TSX/TSXV since 2012

-       Capital Raised - U.S. issuers raised $1.0B in equity capital YTD September; $18.7B in capital raised over the past 10 years

So what does this all mean for U.S. companies looking for growth capital? There is a lot of money waiting to be deployed and a lot of public companies that have raised capital that are now looking for acquisition opportunities. 

TSX and TSXV offer U.S. companies a unique listing and financing option to achieve their long-term growth plans. The Canadian capital markets and “public venture capital” can be used as an alternative to traditional private capital options while taking advantage of the benefits of being a public company. These benefits can include a path to liquidity for investors and employees and acquisition currency to fuel the company’s growth.

Listing on TSX or TSXV and eventually dual listing on a U.S. exchange can be an effective strategy for managed growth, while leveraging the liquidity of both the Canadian and U.S. marketplaces. 

The recently published Guide to Listing for US Companies provides an overview of the opportunity, considerations and requirements to list on Canada’s premier equity markets.  

For more information, contact Delilah Panio, VP, US Capital Formation, at Delilah.panio@tmx.com.

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