While the Tel Aviv Stock Exchange slowly begins to recover from its drought of public offerings and continues attempts to attract more companies, other stock exchanges around the world are carrying on with their intensive efforts to pursue Israeli companies. If in the past, companies holding an overseas IPO almost automatically chose Nasdaq or London - today Australia, Singapore, trading over the counter in the US and others are also options. One of the stock exchanges that hopes to become a preferred option is Canada's Toronto Stock Exchange that has moved towards this by appointing an official representative in Israel.
The Toronto Stock Exchange (TSX) and the marketplace for emerging companies the TSX Venture Exchange (TSXV) already have six companies listed, which are Israeli or have an Israeli connection, including, for example, Gazit-Globe. The TSX has marked the Israeli market as a target for expansion and appointed Yossi Boker, an entrepreneur and former CEO of a high tech company to lead the business development activities in Israel of the TSX. Last week, TSX Chief Client Officer Shaun McIver visited Israel and met with Israeli entrepreneurs, companies and investors. The two men told "Globes" what Toronto has to offer Israeli companies.
"We are here in Israel because we identified the need for companies to raise money and obtain access to global capital liquidity," said McIver. "We have two platforms - TSX Venture, which is suitable for smaller companies, and TSX for the larger companies. What particularly interests us is Israel's very strong innovation sector. There is a very strong innovation economy here and we feel that companies can benefit from the capital that can be found on our platforms. Yossi knows the market well and the needs of the entrepreneurs here and he is helping us to get the message across here."
Globes: do you have a target in terms of numbers, how many Israeli companies do you want to list in Toronto?
McIver said, "We believe that there are a large number of companies that can benefit from listing for trade in Toronto but understand that this is a long term investment and that it take time 'to educate' the market. In any event, Israel is a major opportunity for us."
McIver points out that it is not only technological companies that are being targeted. "In actual fact the TSX is very diverse in terms of sectors with 29% of companies coming from the financial sector, 22% from natural resources, and 31% are growth companies including technology. There is a broad range of industries that we can support. The healthcare sector is also part of the innovation economy and that is also important for us."
He added, "Our platforms are suitable for both private companies and those that are already traded in Israel. Canada has a stable financial structure and a market that is perceived as having relatively small litigation risks and a friendly environment for companies. They can gain access to international capital because 40% of the trading in shares in Toronto is currently from non-Canadian investors. We have a strong connection with capital in the US."
In that case, why not list for trading in the US from the start?
Boker responded, "The TSX offers an intermediary stage for companies interested in trading on Nasdaq. For example, a company with a valuation of several tens of millions of dollars that is perhaps still not ready to trade in the US but can still benefit from trading in Toronto."
"Successful experience – a recipe for growth"
For smaller companies, the TSX offers the TSXV platform and according to Boker hundreds of companies traded on the TSX are graduates of the TSXV, including companies with a market cap of more than $1 billion. "On the TSXV, a company receives more convenient conditions in terms of regulation and costs in order that it can focus on its business development," said Boker.
Why is the TSX preferable to the Australian Stock Exchange, for example?
McIver said, "We offer the most successful venture market platform in the world. We also offer Israel-based firms with access to North American capital and liquidity. It's clear that companies have a lot of options to choose and they must examine all of them but they must do their 'homework' in order to understand the stock exchange on which they are trading, the types of companies on it, the types of investors, the levels of liquidity and more. Our stock exchange has had major success in the innovation sector and we believe that this successful experience will provide companies with a recipe for growth."
McIver added that the regulation is relatively friendly, and the stock exchange works closely with companies in order to help them comply with the required conditions. A further advantage that he mentions is the agreement between the Canadian and US authorities for dual listing, which allows for Canadian issuers to make registered public offerings in the US using a prospectus prepared and reviewed in Canada.
As of today, there are hundreds of foreign companies listed in Toronto, most of them from the US. McIver said that the TSX is moving forward in a number of other countries including Israel, as targets for its international expansion. One target is Chile, where the Toronto stock exchange collaborates officially with the local stock exchange. "It's a type of relationship that we'd be happy to collaborate with other stock exchanges around the world," said McIver.
It's not difficult today for technology companies to obtain private financing.
Boker said, "From my perspective as a former entrepreneur who sold his company (RED-C was sold for $45 million), there is no doubt that private financing is very important. Many entrepreneurs think that selling a company is the easiest exit. You get the money and can go an lay on the beach. But when you set up a startup it is the biggest creation of your life after your family and children. You invest blood, sweat and tears and go without sleep at nights for years. Some entrepreneurs are not aware of the emptiness after selling a company, or the huge change from being part of a large and sometimes bureaucratic organization. For me it was a shock."
"More and more entrepreneurs want to build a large company. When you choose doing it via a stock exchange, you can make a bit of money and still continue to build an organization that you will be proud of. We look to entrepreneurs that believe in their companies and want to take them to heights and to be a company worth billions.
"Private financing is important but choosing to take the company public gives entrepreneurs much more power because they become less dependent on funds. You simply have to find the right timing."
How did you come to work with the Toronto Stock Exchange?
Boker said, "Ten years ago, I thought about what would be the right step for the company that I had founded and managed and which was already profitable with large customers and excellent technology. Exactly then representatives from the TSX came to Israel and I met with them at a conference that they had organized. They said that I had an excellent company for the TSXV, and we began the listing process, and we met with bankers. A short while after that the sub-prime crisis hit and there was a "nuclear winter" and everything evaporated. In 2012, I sold the company. it was a good exit and then I worked as a consultant to startups. A year ago, one of the bankers with whom I was in touch in the past came to Israel and we met up. He told me that the TSX was aiming to expand to Israel and I asked him if they needed somebody in the field. We met and the match was perfect even though I never did list on the TSX in the past. But 10 years later, I hope to make up for it by listing many Israel companies on the TSX."
Published by Globes [online], Israel business news - www.globes-online.com - on June 13, 2017
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