TMX CEO sees secondaries surge
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NEW YORK (Reuters) - TMX Group (X.TO) Chief Executive Thomas Kloet said on Wednesday that he sees secondary offerings by companies listed in Canada surging this year and early into 2010, particularly in the oil, gas and mining sectors as commodities prices begin to recover.
Speaking at the Reuters Global Exchanges and Trading Summit in New York, Kloet said the increase in secondary offerings, or additional shares issued by already public companies, has been the result of higher oil and gold prices that are tempting companies to capitalize on higher share prices that have resulted.
"I think as you see commodity prices come back, that really spells an opportunity for that market," Kloet said.
"When we saw gold hit $1,000 an ounce, a couple of companies did secondaries and naturally we saw a pretty good market for those," Kloet said of the recent spike in gold prices.
TMX Group operates the Toronto Stock Exchange, Canada's primary stock market, and the Montreal Exchange, the country's main derivatives exchange.
Secondary offerings, or additional shares issued by already public companies, have soared worldwide by about 21 percent this year compared to a year ago, as companies have sought additional capital to plug holes in their balance sheets caused by the financial crisis.
In the United States, the secondaries market has been dominated by banks recapitalizing to conform to government requirements for capital cushions.
Last week, the head of equity capital markets at Bank of America Merrill Lynch (BAC.N) told Reuters that an increase in secondaries was typically a precursor to more IPOs because they show a returning appetite for risk.
Kloet said he expects the Canadian market for initial public offerings to start picking up again after a near halt to IPOs in the past year.
"What we have seen, though, in terms of valuations is a pretty good start to the year in terms of secondary offerings, and we're starting to see a real appetite," Kloet said.
TMX was currently on a road show through several major U.S. cities in a bid to attract new listings by small and mid-sized U.S. energy and mining companies.
(Reporting by Phil Wahba; Editing by Gary Hill)
