Private and public markets have historically enjoyed a symbiotic relationship in Canada: Private money helps bring startups public, private money gets an exit, startups grow in Canada. Today, Jameson Berkow casts a light on how that relationship is breaking down – and how Canadians are being robbed of the opportunity to participate in their own homegrown success stories.
Headlines
- Developing: Ottawa approves Glencore’s takeover of Teck’s coal business
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- Yukon government says cyanide from slide at gold mine found downstream
- Cereals Canada faces revolt as high-profile members criticize $100-million facility
Up top
Streaming platforms launch legal challenges to new Canadian tax
Foreign streaming platforms have launched challenges to the implementation of measures under Ottawa’s Online Streaming Act, which will force them to inject millions of dollars into Canada’s broadcast sector, Marie Woolf reports.
The Motion Picture Association’s Canadian affiliate, which represents studios such as Disney, Paramount, Sony, Universal and Warner Bros. Discovery, launched dual legal challenges in Federal Court to decisions by Canada’s broadcasting regulator, which is implementing the act, also known as Bill C-11.
Music streaming platforms Amazon, Apple and Spotify also filed a legal challenge in the Federal Court of Appeal over the CRTC’s decision to compel them to make financial contributions in Canada under the act.
⏯️ You might also like: What to know about the Online Streaming Act
In focus
How global public market declines are hurting Canada
Red words are never good.Photo illustration by the Globe and Mail/iStockPhoto / Getty Images
A decades-long trend of private capital playing an increasingly prominent role in building startups into mature companies is robbing average Canadians of the opportunity to participate in their own homegrown success stories, Jameson Berkow reports. That’s because only wealthy individuals or large institutions can typically buy private company shares.
- In the first three months of 2024, none of the 15 exit deals that occurred during the quarter involved an initial public offering, according to data from the Canadian Venture Capital and Private Equity Association.
- Roughly half involved private investors buying public companies, and the others were sales from one private investor to another.
To get a sense of the seismic shift in the investing landscape, you only need to look at how the makeup of the TSX has evolved over the past two decades. (The recent spike you see is a surge in companies going public to ride the pandemic.)
According to my analysis, those lines seem to be getting shorter. That might speak volumes on the direction of Canada’s overall economic direction, but what to make of it on an individual level? We presented Jameson with a scenario:
I’m in an elevator with you and I’m running late to a meeting, my mortgage renewal is coming up and my eldest child is a first-year university student who can’t find a place to live. I might have time to read one story on Saturday while I’m “watching” my younger child running around a soccer field. Why should it be this?
I get it. Folks are facing money worries all over the place for a variety of reasons. One of the key factors driving Canada’s economic anxiety is an increasing necessity for the country to make its own success. The potential growth of startups here – and what they could contribute to Canada’s economic growth – is inextricably tied to your personal investments, your pay (even if you’re late to your meeting!), and your kids’ future. If they’re being sold to private companies instead of going public, this story will help you understand how the highest returns and risks are in private markets and how you might soon be able to access them.
That makes sense. I’m flipping back to being me now: What surprised you the most as you reported this story?
Just how much Canada stands to lose from this trend compared to other markets around the world. Other countries like the U.S. and Britain have seen similar declines in their publicly listed companies, but they both have fairly robust private funding networks that at least allow the benefits that come from growing businesses to stay within their borders. Canada doesn’t have that kind of network, especially outside of our big hubs, leaving entrepreneurs across most of the country with little alternative but to eventually sell their businesses to foreign buyers.
You can read Jameson’s full report here.
Charted
Canada’s rental housing grows unevenly across major cities
Canada is undergoing a once-in-a-generation boom in rental housing construction that should eventually help renters faced with a dearth of vacancies and soaring rental rates. Not all parts of the country are building at the same speed, and Canada’s largest city risks falling behind. Jason Kirby has more in this week’s Decoder.
The lookout
On our radar and reading list
Economy: Friday’s highlights include Canadian employment for June; U.S. non-farm payrolls; Japan household spending; Euro-zone retail sales and German industrial production.
Technology: Ottawa is chipping in $120-million for semi-conductor startups and training.
In the ocean: The return of Newfoundland’s commercial cod fishery is fuelling dreams of economic resurgence.
On the farm: Windsor’s high-tech food producers are facing a critical shortage of labour.
Giving proof through the night: The American Pyrotechnics Association is forecasting a record US$2.4-billion in revenue for the 2024 fireworks season.
Markets this morning
Global stocks rose ahead of hotly anticipated North American jobs data and the second round of French voting this weekend.
North American futures were mostly in the green.
The pan-European STOXX 600 was up 0.33 per cent in morning trading. Britain’s FTSE 100 was flat at 0.016 per cent, Germany’s DAX rose 0.82 per cent and France’s CAC 40 gained 0.31 per cent.
In Asia, Japan’s Nikkei was flat, while Hong Kong’s Hang Seng closed down 1.27 per cent.
The Canadian dollar was flat against the U.S. dollar.