Canada's largest stock exchanges are shrinking, with the number of listed companies declining for the fourth consecutive year, despite the country's stock index outperforming the S&P 500.
On the Toronto Stock Exchange (TSX) and its venture counterpart, the TSX Venture Exchange, delistings and privatizations continue to outnumber initial public offerings (IPOs), starkly contrasting with the TSX Composite Index's 27% gain. Data from TMX Group, the operator of the TSX, shows that the number of listed companies on the exchange has dropped by 45% since 2008, leaving only 678 by the end of the third quarter.
"A certain degree of 'hollowing out' in the market is concerning," said Dan Nolan, Vice Chairman and Managing Director of Equity Capital Markets, Corporate & Investment Banking at National Bank Financial. He noted that over C$100 billion (US$72 billion) worth of Canadian companies have either gone private or been acquired in recent years, mostly small- and mid-sized firms increasingly overlooked by institutional investors since 2021.
Nolan added that institutional investors are still interested in Canadian IPOs and are anticipating larger deals. "We often hear them say they want new investment opportunities."
This trend reflects a broader market preference for companies staying private or going private. In 2025, 11 Canadian firms completed privatization deals worth a combined US$45.4 billion, including acquisitions by other listed companies.
Notable transactions include the C$6.4 billion privatization of Innergex Renewable Energy by Caisse de dépôt et placement du Québec and the sale of Canadian Imperial Financial Management to Abu Dhabi's Mubadala Investment Company in August.
In contrast, successful IPOs have been scarce. Brookfield Asset Management-backed Rockpoint Gas Storage went public, while Xanadu Quantum Technologies announced plans to list via a SPAC merger.
Ali Pandes, Associate Professor of Finance at the University of Calgary, said the rise of private equity continuation funds and private credit has contributed to Canadian and U.S. companies avoiding public markets.
"Average middle-class investors are being deprived of growth opportunities," he said. "This also ties into income inequality—high-quality investments are flowing to high-net-worth individuals."
Earlier this year, Canadian securities regulators relaxed fundraising rules to boost stock trading activity. Exchange operators are calling for further policy adjustments, hoping IPO numbers will eventually surpass privatizations in the coming year.
**Fewer Companies, Larger Scale**
Rob Peterman, Chief Commercial Officer of the TSX, noted that while the number of listed stocks has declined, their average market capitalization has nearly tripled over the past decade.
"The market clearly favors scale," Peterman said, adding that TSX-listed firms believe size is crucial to competing for global capital. He also highlighted a valuation gap, with private equity buyers often offering better terms than public markets.
Michelle Khalili, Global Head of Equity Capital Markets and Corporate Finance Advisory at Scotiabank, said, "While Canadian valuations still lag behind near-record U.S. levels, TSX valuations have rebounded to a reasonable point where equity financing costs support growth-oriented issuances, creating a more favorable IPO environment."
Khalili expects improving IPO prospects next year. "Many high-quality private Canadian companies have been on the sidelines, and public markets are now a more attractive option than in previous years."
Sources indicate that several large firms, including Apotex Pharmaceuticals, are preparing Canadian listings, while others like Vale Base Metals aim to go public in the coming years.
"Canada lacks a landmark IPO to catalyze follow-on listings," said Joseph Schuster, founder and CEO of Ipox Schuster, an ETF issuer tracking U.S. and Canadian IPOs.
Schuster noted that while TSX IPO activity has been subdued, it’s not due to a lack of growth or attempts by Canadian firms. In fact, several companies, including tungsten miner Almonty Industries and Pinnacle Food Group, chose Nasdaq listings in 2025.
**Potential IPO Candidates**
Schuster hopes for a turnaround next year, possibly driven by Barrick Gold spinning off its North American gold assets, long-awaited listings from WestJet and Porter Airlines (Canada’s second- and third-largest carriers), or a tech standout like Cohere. "IPO markets often need one standout deal to kickstart activity."
Investment bankers cite successful deals as proof of demand. In 2024, retailer Dynamite Group, parent of clothing chain Garage, saw its shares double post-IPO after a slow start, while Rockpoint Gas Storage’s oversubscribed offering has gained over 20%.
Jackie Nixon, Head of Canadian Equity Capital Markets at RBC Capital Markets, said, "Successful IPOs are drawing sponsor attention, gradually restoring balance between private and public markets."
In an email, she added, "Investors are eager to allocate across quality firms of all sizes, and the pipeline for 2026-2027 listings is finally expanding."
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