The Alberta Securities Commission is seeking input on steps it should take to foster a vibrant public and private capital market in the province while protecting investors.
It has published Consultation Paper 11-701 Energizing Alberta’s Capital Market as part of the consultation process.
“There are many parties engaged in strengthening and diversifying the Alberta economy and ensuring that Alberta is open for business,” said Denise Weeres, director of new economy at the securities commission. “We hope to use this consultation to spur conversation about innovative approaches to securities regulation that will improve access to capital for Alberta businesses and create new opportunities for investors while still providing appropriate investor protection.”
Comments and feedback should be submitted to the ASC by Sept. 20.
“In 2018, there was a total of $20.1 billion raised by Alberta businesses. This represents a significant decline from prior years which saw $63.8 billion raised in 2017 and $53.2 billion in 2016. Interestingly, the type of security being issued has also changed. While equity was the dominant type of security issued in 2016 and 2017, in 2018 the significant majority of securities issued by Alberta businesses (publicly and privately) was debt,” said the consultation paper.
“Alberta oil and gas and pipeline businesses continue to dominate both public and private financings, with pipeline financings overtaking oil and gas in 2018. However, “Other industries” (industries other than oil and gas, pipelines, financial services, real estate, utilities and investment companies and funds) have seen a year-over-year proportionate increase.”
The paper said that across Canada there continues to be a decline in both the number of operating businesses that are going public (i.e., becoming reporting issuers 12) and that are staying public.
“Some of these businesses exit the public markets because they no longer have a viable business but many exit through acquisition. Although the decline has been noted in Canada, the U.S., and elsewhere, this trend appears particularly pronounced in Alberta with the number of listed reporting issuers declining by approximately 35 per cent from 656 in 2013 to 424 in 2018,” explained the paper.
“Like the Alberta economy, the Alberta public capital market continues to be dominated by the oil and gas industry, followed by utilities and pipelines. However, we are seeing significant change in the size of those businesses. Operating businesses that remain public tend to be getting larger. In contrast, there has been a dramatic decline in the last 10 years in the number of Alberta public “venture” companies i.e., those, trading on the TSX Venture Exchange (TSXV) and the Canadian Securities Exchange (CSE). For example, the number of Alberta-headquartered TSXV-listed businesses has decreased from 422 in 2008 to 178 as of December 2018.
“The market capitalization of Alberta-headquartered businesses represents approximately 19 per cent of the aggregate market capitalization of the Canadian public markets, which is second only to Ontario. However, the number of Alberta-headquartered public companies is much lower, approximately 10.6 per cent of those listed on the Toronto Stock Exchange (TSX) and 10.4 per cent of those listed on the TSXV.”