Toronto Stock Exchange officials visited Atlanta Nov. 18 to show companies with small- to mid-level capitalization how to raise money by listing on the Canadian markets.

The exchange is known worldwide for its concentration of companies that deal with natural resources. Nearly 45 percent of the world’s global public energy companies and about 55 percent of the world’s public mining companies are traded on the TSX.  

But officials are wrapping up their 2008 U.S. road show in the Southeast principally to show off the TSX Venture Exchange, a “junior” market designed to help early stage growth companies raise money through public trading.

In today’s economic environment, this route to raising funds for expansion is becoming increasingly attractive to smaller companies, said Tom Kloet, CEO of TMX Group Inc., which owns the TSX, TSX Venture and other markets.

“As venture capital gets a little bit tighter and in the current market climate, the opportunity to list on a regulated exchange which has a proven track record of providing good financing, good trading, may be exactly what entrepreneurial companies should be looking at at this particular time,” he said.

The base of such companies is strong in the Southeast, Mr. Kloet told GlobalAtlanta in an interview at the InterContinental Hotel Buckhead, where TSX hosted a luncheon and informational seminar.

After visiting Denver, Houston, Minneapolis, Phoenix, San Diego and Atlanta, TSX is finishing its 2008 U.S. tour with a stop in Raleigh, N.C., on Thursday, he said.

“There’s an entrepreneurial spirit in the Southeast that I think is very, very important and relevant, and in the micro-cap space, there’s a lot that TSX and TSX Venture can offer,” Mr. Kloet said.

In the U.S., companies too small to list on Nasdaq have no other fully regulated markets to turn to, said Delilah Panio, TSX’s director of business development strategy.

Canadian markets have an infrastructure that allows small companies to go back to the market to raise capital over and over again, much like they would do through a traditional venture capital process, she said.

“Micro-cap” companies raised $11 billion on the TSX Venture Exchange last year, 85 percent of that in secondary rounds after the initial public offering, Ms. Panio said.

Daryl Yurek has used the market as an alternative to the traditional venture capital process for more than 25 years.

Currently the chairman and CEO of ID Watchdog, an identity theft protection service, Mr. Yurek has raised more than $350 million by listing a dozen companies on the TSX Venture Exchange since 1982.   

He told the luncheon audience that TSXV provides a framework for easier mergers, better stock valuations and transparency, but he also noted that listing publicly is more expensive than raising capital through private rounds.

The TSX markets strike the right balance of sufficient oversight without the often-cumbersome regulatory requirements of U.S. markets, said Lorne Abony, CEO of Fluid Music, who also spoke to the audience.

“You don’t have massive lawsuits that are distracting as the CEO of a public company,” said Mr. Abony, whose company is listed on the Toronto Stock Exchange.

Also, the cost of complying with government standards is lower than U.S. markets like Nasdaq, he said.

Although its campaign in the Southeast focused mostly on small- to medium-sized companies, TSX doesn’t rule out larger firms.

Mr. Kloet said the idea is to have an “ecosystem” where companies can have access to capital in the Toronto markets throughout their development, starting with the TSX Venture, then “graduating” to the TSX before moving on to co-listing on a U.S. exchange. 

“They’ll grow with us,” he said.

TSX has the second-highest number of technology companies of any market.  This year, it has begun a focus on clean technology companies with more than 100 now listed.

Mr. Kloet said the market has 242 international issuers listed on the exchange, more than half of them U.S. companies.

The exchange’s nearly 4,000 companies make it the “second largest equity exchange group in the world by number of listings,” he said. The market has $2.2 trillion in market capitalization and was the first to switch to an all-electronic trading mechanism, he added.

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