UNGAD CHADDA Companies must ensure that they have excellent, well-run assets and operational plans, and ensure that they have a strong management team in place to generate confidence in the investor community
Canada’s two main bourses – Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSX-V) – are “very relevant, highly ranked and an exciting place to be” for international firms, despite dozens of companies delisting in 2013, says TSX senior VP Ungad Chadda.
In total, 64 companies terminated their listings on the two exchanges last year, and the number was “certainly higher” than it would have liked to see.
On TSX-V, which is the Canadian market for junior companies, there were 34 delistings, 12 of which were related to merger and acquisition activity. The other 22 firms that have stopped trading their shares on TSX-V have either failed to meet the exchange’s listing requirements or have voluntary decided to terminate their listings.
Chadda does not believe that the number of delistings will damage Toronto’s reputation as the mining finance capital of the world, pointing out that the number is quite small in compari- son to the size of the exchanges’ issuer client base, considering the strong run that TSX and TSX-V have had from 2007 into part of 2011.
“If you list the most mining companies in the world year over year and you raise the most capital for mining year over year, when the mining cycle slows down, you would expect to see some delistings on our side.”
Chadda believes that many of these companies that have delisted will return to the stock exchanges after “reactivating, refinancing and reinventing” themselves. “We have seen this before,” he states.
In 2013, TSX has had eight new mining listings, six of which were graduates from TSX-V, one a spin-off and the other a dual listing that came from the ASX in Australia.
For initial public offerings (IPOs), 2013 has been a slow year for TSX with no new mining IPOs. TSX-V has had seven new mining IPOs.
“Although IPOs are often talked about quite extensively as a barometer of how well an exchange is doing, a large portion of our mining companies come to us by way of an alternative listing, whether that is by way of a reverse takeover, a spin-out or a graduation from TSX-V.”
TSX and TSX-V had 25 international companies list in 2013, six of which were in the mining sector. “New companies are coming over and are attracted by our impressive track record of equity capital financing in the mining space – most recently the $6.9-billion raised in 2013.”
Looking at 2014, Chadda suggests that it is a matter of when and not if investor interest will return to the market and that commodity prices, particularly the price of gold, which influences the venture exchange, will rise.
“Over the last four to five years, companies in the mining sector have been very fortunate with financing that was easier to attract. Now, companies must ensure that they have excellent, well run assets and operational plans, and ensure that they have a strong management team in place to generate confidence in the investor community. Focusing on top quality disclosure and investor relations will also be key.”