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Aug 6, 2020

'Sign of what’s to come': TMX sees uptick in listings, equity raises

Companies are looking to 'raise capital' amid the pandemic: TMX Group CEO

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Toronto Stock Exchange operator TMX Group LTD. weathered the storm in its second quarter, essentially meeting analyst expectations amid strength in its equity trading division as volumes surged. Revenue rose four per cent in the quarter to $217.7 million, though a 12 per cent increase in operating expenses did weigh on the bottom line.

The company also increased its quarterly dividend six per cent to $0.70 per share, the third dividend hike in the last 18 months.

While average daily trading volumes are up 41 per cent so far this year, TMX Group interim CEO John McKenzie is looking toward initial public offerings and equity issuances to help drive results through the back half of the year. In an interview on BNN Bloomberg, McKenzie said TMX is seeing increased interest from companies looking to tap the public markets.

“Really, in the last three months and into July as well, [there’s been] an uptick in the companies looking to raise capital,” he said. “The concern going into the pandemic with the volatility that we would see is that it would be challenging for companies to raise money. But what we’re starting to see is more transactions happening and more activity in the pipeline going forward, and that’s a really good sign of what’s to come.”

McKenzie said he expects interest from both existing public companies and possible new entrants looking to replicate cloud-based software provider Dye & Durham’s successful July IPO.

“There are other companies that are like [Dye & Durham] in the pipeline on the new, initial listing side but there are a lot of existing companies that are looking to tap the markets to finance,” he said.

“The anecdotal feedback that I get from our team that works with the listed issuers is that they’re as busy as they’ve been probably in the last 18 months.”

McKenzie said there’s also been a resurgence in interest in mining after a chill fell over activity in the junior exploration and development sector earlier this year.

“The strength around mining, you’re seeing it not only in terms of the activity around issues and new financing, but in terms of the trading activity as well,” he said. “That’s been a change from what we saw in Q1 and Q2 as we’ve come into July. The strength in mining has really driven a lot of interest in our venture exchange and our venture exchange volumes in July were the highest we’ve seen in years.”