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Canada and the Canadian government are open for business with Israel, was the message sent out loud and clear at the "Going Public in North America on Toronto Stock Exchange" in Tel Aviv this week.
The conference, organized by the Israel-Canada Chamber of Commerce and Industry, reflects a new effort by the Toronto Stock Exchange to attract Israeli companies.
"The Canadian government lead by Prime Minister Stephen Harper has made the strong support of Israel, its security and its existence a leitmotif of his government's foreign policy," said Jon Allen, the Canadian Ambassador to Israel, who reinforced Canada's support for the country in both the international and domestic arena,
The TSX Group touts itself as the second largest exchange in the world by the number of companies listed, second only to Mumbai, and the seventh largest in the world by total listed market capitalization.
It also says it is positioned as an alternative to the AIM market in London, which has been a traditional destination for many Israeli companies seeking financing, and the NASDAQ market in New York, which poses many challenges for smaller companies.
"The strength of the TSX is as a market place for small- and medium-sized companies looking to access North American capital," said Raymond King, senior manager of business development for the TSX.
King explained that the timing of this visit to Israel comes after a major restructuring of the business plan of the exchange.
"We created a more aggressive international stance and identified Israel as a place of great opportunity," he said. The TSX is home to listings from over 20 countries. Currently, however, there are no Israeli companies listed directly on the exchange.
Benny Spade, an Israel-based financial consultant for technology companies, identified the thorough analyst coverage of companies on the TSX and the liquidity of the exchange as two major benefits for companies looking to list in Toronto.
These factors, according to King, set it apart from the AIM market.
King also noted that the volume and nature of the investment environment in Toronto allows for sustained value of listed companies, making it possible to avoid the fate of many small cap companies, which often lose their value after the IPO.
Another factor to consider when listing in Canada, is its regulatory environment where the often burdensome Sarbanes-Oxley regulations in the US do not exist but the high standards of regulation are recognized by the US Securities and Exchange Commission. This recognition creates the opportunity for properly structured Canadian-listed companies to raise money in the US without having to adhere to the requirements of Sarbanes-Oxley, the costs of which many smaller companies find cumbersome.
King noted that suggested changes in the Sarbanes-Oxley law, which could result in lower costs, are only in a preliminary stage and he believes the major deterrent for companies to list in the US is not necessarily the costs, but rather the liability associated with failing to meet the law, an aspect of the regulations that probably will not change.
Yet, in the face of all the cheerleading, consultant wasn't quite convinced about the practicalities of listing in Toronto.
"There are a lot of unknowns, there are things which still need to be clarified," he said.
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