After another year of poor capital-market activity in Manitoba, the Toronto-based TSX Venture Exchange has decided to close its Winnipeg office on Dec. 31. The move comes as escalating competition and an almost borderless world of virtual trading fuel consolidation of world stock exchanges.
Kevan Cowan, president of the junior exchange in Calgary, says the decision came down to where the TSXV could best deploy its resources. “The volumes out of Winnipeg were very, very low,” he says.
The TSXV will continue to serve Manitoba-based companies from its Toronto, Calgary and Vancouver offices. “We have more than 2,000 companies that are not served by their local office,” Cowan says. “Many companies out of Toronto are served by our Alberta office, either because of historical legacy or preference. We’re used to serving people from offices that aren’t in their local jurisdiction.”
History buffs will lament the office’s closing — it marks the end of a remarkable 103 years of service. The office opened under the banner of the Winnipeg Stock Exchange in 1904 and served local firms for almost a century. The WSE was bought in 1999 by the Canadian Venture Exchange, which was formed through the merger of the Vancouver and Alberta exchanges. The CDNX then merged with the Ontario over-the-counter market and the junior listings of the Montreal Exchange in 2001 to form the TSXV.
Cowan says the TSXV had committed to keeping the Winnipeg office open for five years, and the office lasted two years longer than that.
Ken Cooper, the WSE’s last CEO, says the decision to close the office is understandable in light of worldwide consolidation of exchanges. “If you’re not profitable and efficient,” he says, “you’ll disappear.”
Cooper says the office closure is yet another cloud hanging over capital markets in Manitoba, the darkest of which continues to be failed Crocus Investment Fund.
“There’s not much going on for private-sector capital in Manitoba. It’s pretty negative,” he says. “The Winnipeg Angel Organization is the only public voice of private-sector capital other than the brokerage houses. It’s too bad. There are no other initiatives replacing [the TSXV office]. Is the office closing disastrous? No. Is it helpful? Not at all. It does nothing good for the province.”
Kevin Strong, who has managed the Winnipeg TSXV office since 1996, says only three Manitoba-based companies went public in 2007 — All In West! Capital Corp., DiaMedica Inc. and Mainstream Minerals Corp. — which brought the provincial total of TSXV companies up to 22, including capital pools and shell companies on the NEX, the TSX’s exchange for companies with low trading activity.
“The listings haven’t grown. As companies such as Jovian Capital Corp. and Lanesborough REIT move up to the TSX, I have fewer clients that do their regular filings through me,” says Strong. “The markets are [so strong] and companies are raising a lot of money and going public on the TSXV, but that is not being mirrored in Manitoba. We’re not taking advantage of it.”
A “busy” year would see five or six IPOs in Manitoba, he adds.
Tom Waitt, senior vice president of Union Securities Ltd. in Winnipeg and former chairman of the WSE, says he is disappointed to hear the news but acknowledges that an office can’t be sustained on a handful of deals a year. “We had a chance, but we blew it,” he says. “Saskatchewan is booming; there are lots of deals there. It was pretty much non-existent five or 10 years ago, and now has five times or more deals than we do. In Winnipeg, we just couldn’t follow through as a community. Does that have roots in Crocus? Possibly.”
Waitt says long-term implications for the Winnipeg market shouldn’t be too severe but young companies will miss out on the face time with the local office. “That was the beauty of it here,” he says. “If you wanted to walk through a deal, Strong would take you through every step of the way. We had an advantage we didn’t use.”
Charlie Spiring, CEO of Wel-ling-ton West Capital Inc. in Winnipeg, says the TSXV office helped many companies, such as Arctic Glacier Inc., get their start. “I remember Assante [Corp.’s] first trade was on the WSE — because I did it,” he says. “The office helped with the reintroduction of junior capital pools, which was important for the market here. It helped when we focused on micro-caps.”
@page_break@Spiring is concerned about the lack of venture capital in Manitoba and the rest of Canada, which he partly attributes to the Crocus-fuelled “sabotage” of labour-sponsored markets. “I feel badly for these venture companies,” he says. “I don’t think an Arctic Glacier would come out of today’s environment.” IE
TSX Venture Exchange to shutter its Winnipeg office
Local executives say it will now be more difficult for Manitoba juniors to get off the ground
- By: Geoff Kirbyson
- December 5, 2007 December 5, 2007
- 09:43