Canada’s Stock Exchange Shrinks Amid Rising Index
Canada’s leading stock exchange is experiencing a decline, with the total number of listed companies decreasing for the fourth consecutive year. Surprisingly, this is happening even as the country’s stock index has surpassed that of the S&P 500.
On both the Toronto Stock Exchange and its smaller counterpart, the TSX Venture Exchange, many delisted and private entities are performing better than new IPOs. This contrasts sharply with the 26% growth in the benchmark S&P/TSX Composite Index. As reported by TMX Group, the number of companies listed on the TSX has dropped by 45% since 2008, leaving just 678 companies by the end of the third quarter.
Dan Nolan, who serves as the vice-chairman and managing director at National Bank Capital Markets, expressed concern about the “hollowing out” of the market. He noted that around C$100 billion worth of Canadian firms have gone private or been sold over the past few years, primarily affecting small to medium-sized businesses that have attracted less attention from institutional investors since 2021.
These investors seem to be focused on larger IPOs and maintain an interest in Canadian public offerings. Nolan mentioned that institutional investors are keen to discover new investment opportunities.
This trend can be attributed to a market environment that favors companies remaining private or transitioning to private ownership. In 2025, 11 companies made the leap to private status, with deals amounting to $45.4 billion, some of which involved acquisitions by public firms.
Significant deals include Québec Dépôt et Placement du Québec’s C$6.4 billion acquisition of Innergex Renewable Energy Inc., and the sale of CI Financial Corp. to Abu Dhabi’s Mubadala Investment Company, finalized in August.
On the flip side, very few companies are going public. Rockpoint Gas Storage, backed by Brookfield Asset Management, was one of the few to complete its IPO, joined by Xanadu Quantum Technologies, which announced its plans for a public offering through a blank check merger.
Ali Pandes, an associate finance professor at the University of Calgary, suggested that the rise of private equity and private credit is pushing companies away from public markets in both Canada and the U.S.
“Ordinary middle-class investors are being deprived of growth opportunities,” he commented, linking this to income inequality, as wealthier individuals seem to have the upper hand in investment prospects.
Earlier this year, Canadian securities regulators eased rules for fundraising, aiming to boost stock trading. Exchange operators are optimistic that the number of IPOs may finally outstrip privatizations in the coming year.
Rob Peterman, chief commercial officer of the Toronto Stock Exchange, acknowledged that while the total number of listed stocks has fallen, their average market capitalization has nearly tripled over the past decade. “The market clearly values scale,” he remarked, suggesting that firms on the TSX need to grow in size to attract global capital and noting a valuation gap where private equity offers more attractive terms than public markets.
While Canadian valuations remain below recent highs seen in the U.S., the overall TSX valuations have rebounded to levels that can justify growth-focused issuances, creating a friendlier environment for IPOs, according to Michelle Carilli, global head of ECM and corporate finance advisory at Scotiabank.
Looking ahead, Carilli anticipates that new deals will become “increasingly constructive,” as many high-quality Canadian private firms are currently in a period of waiting, finding public markets more appealing than they have been in the past few years.
Some major firms, like Apotex, are gearing up for public listings in Canada, while others, such as Vale Base Metals, have indicated plans to enter the public arena in the next few years.
Joseph Schuster, founder and CEO of Ipox Schuster LLC, pointed out the lack of any landmark transaction in Canada that could inspire other companies to go public. He remarked that although the pace of IPOs on the TSX has been slow, many Canadian companies are planning to list on the Nasdaq by 2025, including Almonti Industries and Pinnacle Food Group.
Schuster holds hope that the trend might flip next year with potential new entries, like Barrick Mining’s North American gold mining spin-off, and Canada’s major airlines WestJet and Porter Airlines, along with tech innovator Kohia. “What starts an IPO market is a strong first deal,” he said.
Investment bankers are beginning to cite successful trades as proof of demand for new shares. For example, Dynamite, the retail group behind the Garage clothing chain, initially saw a tepid response to its IPO in 2024, but its stock has since more than doubled. Lockpoint’s IPO was even more impressive, with a stock price increase of over 20%.
“With many examples of successful IPOs, sponsors are taking notice, and we’re beginning to re-establish a positive balance between private and public,” commented Jackie Nixon, head of Canadian equity capital markets at RBC Capital Markets.
She also highlighted a strong demand from investors for quality companies across various market capitalizations, hinting that a growing number of companies are setting their sights on public listings in 2026-2027.
