Supporting the Israeli Growth Model

Discover the possibilities with Toronto Stock Exchange and TSX Venture Exchange.

In 2009, following the global capital market downturn, Israeli venture capital funds found capital raising to be exceedingly difficult.  Only $US 229 million was raised, a sharp 72 percent drop from the previous year and the third lowest amount raised in the past decade.

With the highest density of start-ups in the world, where can Israeli's companies seeking capital look? One option is Canada.   

TMX Group, parent company to the senior equity board, Toronto Stock Exchange, and to the junior equity board, TSX Venture Exchange, serves the financing needs of global growth-orientated companies from conceptualization through to commercialization.  Together, they offer Israeli companies the ability to access North American capital pools in an environment better suited to their current stage of development, as compared to the US capital markets.

The senior equity board, Toronto Stock Exchange ("TSX"), is the world's 7^th largest stock exchange and the 3^rd largest stock exchange in North America.  TSX provides mature, established companies from around the world with a dynamic, highly liquid market to access both North American and global capital.

As Canada's national exchange for public venture class securities, the junior equity board, TSX Venture Exchange, provides early-stage companies with the opportunity to gain a solid foothold in the North American public capital markets.  In addition to traditional listing vehicles such as an Initial Public Offering (IPO) or Reverse Take-Over (RTO), companies on TSX Venture Exchange can also take advantage of the Capital Pool Company^® (CPC) program.  This unique listing opportunity brings a seasoned management team with capital together with a private company in need of funding and management expertise.

TMX Group has been in business for almost 160 years, and now includes almost 4200 companies with total market capitalization of CDN $2.1 trillion.  TMX Group is the second largest equity exchange group in the world, based on number of listed companies.  As of 31 December 2009, CDN $65 billion had been raised for its listed companies, and to the end of September 2010, CDN $33.7 billion has been raised.  In total, year-to-date trading statistics to the end of September 2010 indicate that 119.2 billion shares were traded on the two exchanges, having a traded value of more than CDN $1.043 trillion.  In short, a very liquid market for companies of all sizes and origins.

Israeli companies should be aware that TSX and TSX Venture Exchange are North American exchanges, offering all of the benefits of a listing as would an US exchange.  In fact, the two entities combined are the largest non-American exchange for the listing of American companies, with 147 US companies listed as of 30 September 2010.  However, both TMX equity exchanges do not compete head-to-head with the US exchanges, but serve to complement them in terms of providing a broader spectrum of capital than can currently be found in the US capital markets.

It is important to recognize that the US public capital markets have become increasingly large-cap focused over the past decade.  Most US-based investment bankers now say that any company, regardless of geographic origin, listing on a US-based exchange with a market capitalization under US$800 million will be defined as a "micro-cap" company.  In almost all cases, these "micro-cap" companies will find themselves to be orphaned illiquid stock within a relatively short period of time after listing, due to a lack of analyst coverage and institutional investor support.  In fact, it has been said that two-thirds of all NASDAQ-listed companies are currently illiquid stocks, due to their market capitalizations being too small for US investors.

TSX recognizes that Israeli companies must sustain their growth strategies with significant capital infusions to support long-term development cycles.  The TMX has been committed to the Israeli market since 2007, and has been consistent in business trips to the country, even during the worst of the global economic crisis when other exchanges pulled back their trips to the country. 

The TMX has continued to develop key business relationships with Israeli industry leaders in the venture capital, private equity, investment banking and legal community as well as with numerous Israeli companies directly.  Most importantly, it has launched a key relationship with the Tel Aviv Stock Exchange that is designed to complement their support of Israeli-based companies in their search for ongoing growth capital.

A TSX listing can offer several clear advantages to Israeli companies:

1. Access to North American capital pools for companies at both early and later stages of growth.
2. Access to Sector and Index-based Institutional Investors.
3. Greater analyst visibility and coverage.
4. Lower costs of going public compared to the US market.
5. Proportionate corporate governance that reflects the stage of a company's development - no Sarbanes-Oxley

The TMX recognizes the importance of the North American capital markets to the Israeli economy, and continues to support Israeli companies' efforts to meet their global financing requirements.  

By building on current strengths, the TSX and TSX Venture Exchange continue to work with growth-orientated companies from around the world to help support and finance their success.  It has been helping TSX Group listed companies for almost 160 years, and intends to be a part of their future.