Capital raising shifts further to exempt market in Quebec

Companies in Quebec continued raising more money in the exempt market than in public markets last year, according to the Autorité des marchés financiers (AMF).

In a report detailing the work of its corporate finance branch in the past year, the AMF said prospectus-based financings by companies in Quebec dropped by 32% last year. This came amid an 8% drop in prospectus filings across Canada.

The value of equity capital raised in the public markets by Quebec-based companies dropped even more sharply to $400 million from the $1.6 billion raised in 2022.

“This decline is in line with the downward trend for public distributions by … companies in the rest of Canada,” the report said. Total proceeds dropped by 19% in the rest of Canada to $12.7 billion in 2023 from $15.6 billion in 2022.

The report noted only two initial public offerings were filed by TSX and TSX Venture-listed companies in 2023, down from 19 in 2022.

As a result, total IPO proceeds fell 88% to approximately $150 million in 2023 from $1.3 billion in 2022.

“In Quebec, as in the rest of Canada and the United States, despite a strong performance by the stock markets, the pace of prospectus financings continued to slow in 2023,” said Hugo Lacroix, superintendent, securities markets, at the AMF, in a release.

“Inflationary pressures, sustained interest rate hikes, the global financial climate, and various armed conflicts and geopolitical tensions around the world combined to create a more uncertain economic environment for companies and capital markets in Quebec and abroad,” the report said.

Despite the macro challenges, Quebec-based companies increased the amounts raised on the exempt market by more than 27%, the AMF noted.

Quebec companies raised $11.2 billion in the exempt market last year, up from $8.9 billion in 2022, it reported.

The rise in exempt financing came as the number of companies finding financing in the private market rose by 15% year over year, and the number of exempt distribution reports rose 31%.