Five important takeaways on the financing activity, IPO transactions, and sector performance on TSX and TSXV in 2016
As we approach mid-year, I’ve had a number of people ask me to share some updates on the financing activity, IPO transactions, and sector performance on Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV) in 2016. Five important takeaways are summarized below, but the main message is simple: even as other sectors in Canada have shown encouraging signs of life in recent months, the technology/innovation sector (covering companies in tech, clean tech/renewable energy, and life sciences) continues to stand out.
KEY TAKEAWAYS IN H1-2016
1) We’re number 1 – really. The broad Canadian market has been one of the few stock markets globally to show positive returns in 2016 (as at June 27); and our main indices (the S&P/TSX Composite and the S&P/TSX Venture Composite) have outperformed all other major global indices in 2016.
2) Tech companies continue to go public. Since the start of 2016, 16 new technology/innovation companies have gone public on TSX/TSXV (to the end of May) – this represents nearly 60% of all corporate IPOs and new listings on our exchanges. These companies represent a mix of businesses from the technology (8), life sciences (6), and cleantech (2) sectors. They also include a mix of smaller companies (13 listing on TSXV) and larger businesses (3 listing on TSX). The activity in the technology/innovation sector in 2016 continues a multi-year trend on TSX/TSXV – if you haven’t already seen this, take a look at this short video which condenses the last 7 years into 85 seconds.
3) But where are the large IPOs? Large and high profile tech IPOs and follow-on financings on TSX have been notably absent this year. In this respect, Canada has followed the lead of the US market which has also seen a significant fall in IPO activity. For many larger companies, this has allowed more time to prepare for an eventual TSX IPO (timing the market is hard – but getting prepared to move when market windows open is easier). For many smaller companies, though, this has not had a significant impact (see #2 above) as most small companies go public in Canada via a path other than an IPO.
4) Making money in Canadian tech. Investors have made money investing in the Canadian tech sector. This is obviously very important. Consider this: the S&P/TSX tech index has outperformed the Canadian benchmark index over the last 1-, 3-, 5- and 10-year periods (to the end of May). The same index has also outperformed the S&P 500 over the last 1-, 3- and 10-year periods (also to the end of May).
5) Welcoming the world. TSX and TSXV have always been major listing venues for non-Canadian companies (at last count, we had 235 international companies listed on the exchanges). This has been especially true in the technology/innovation sector in 2016 – of the 16 new technology/innovation companies to go public on TSX/TSXV this year, 7 have been from the US (6) or Israel (1).
The key takeaway is that the Canadian technology/innovation sector has continued to perform well in 2016 and we are hopeful that the momentum will continue to build for the balance of the year. We’re also hopeful that improving market conditions will eventually support more large-cap IPOs in the sector.
Our team continues to work closely with companies, their boards, their investors, and their advisors to help them understand and pursue their funding options. We’re standing-by to help with transaction preparations, to provide guidance on public market readiness, to make referrals/introductions to advisors, to help companies build profile with the investment community, and to connect leaders through our peer-to-peer learning and networking events.
Please feel free to reach out if we can help any of the AceTech Ontario companies as they consider their funding options over the coming months.
The information provided is not an invitation to purchase securities listed on TSX or TSX Venture. TMX Group and its affiliated companies do not endorse or recommend any securities referenced. The information provided is not intended to provide legal, accounting, tax, investment, financial or other advice and should not be relied upon for such advice.