NEW YORK-High-tech, start-up companies-like those in wireless-accustomed to searching for capital may be surprised to know that international capital is searching for them.
Bolstered by money pouring in from abroad and by newly strengthened securities laws, the Vancouver Stock Exchange has recently identified a niche it seeks to exploit, as a “farm (team) system for Nasdaq,” said Michael E. Johnson, the exchange’s new president and chief executive officer. “We have repositioned our thinking and abandoned the idea of trying to control attrition to Nasdaq.”
The VSE has about 53 member firms and 1,500 listed companies. There also is a high turnover involving about 30 to 40 companies at any given time, said John E. Boddie, vice president of marketing, a newly created post at the exchange. “We used to look at that as a negative; now we see it as positive.”
The Vancouver Stock Exchange is an unusual hybrid in that it is the only public venture capital market in the world, according to Johnson and Boddie. However, it is not courting U.S. venture capital firms and funds to list with it instead of Nasdaq. “We’ve had meetings with venture capitalists, but some of our brokers are very suspicious of them. They (the brokers) see the VSE as an alternative to what they call `vulture capitalists’,” Boddie said.
To publicize the fact that the VSE is seeking to list other kinds of American companies, Johnson, Boddie and David A. Laundy, vice president of public affairs, gave a presentation recently at the Canadian Consulate. It was sponsored by the Columbia Business School Club of New York, whose members analyzed and scrutinized potential risks and rewards of the VSE for interested companies and investors.
The exchange, which is nearly a century old, staked its claim long ago on companies involved in minerals extraction, a sector characterized by high risks and rewards. Under its new administration, the exchange seeks other business opportunities in emerging growth areas.
“In 1995, the VSE raised more than $1 billion (U.S.) in capital, and about 70 percent of that volume was in mining,” Johnson said. “Increasing numbers of our new listings are from the U.S., and more and more in advanced technologies.”
Last year, and so far this year, “a leader in trading here has been PCS Wireless [Inc.],” Laundy said. “It’s the perfect example of the kind of technology companies we’re seeking to attract.” Late last year, PCS Wireless issued roughly $7.8 million in new securities on the exchange, said Scott Rose, investor relations director for the Vancouver-based antenna manufacturing concern. PCS Wireless went public on the VSE about two-and-a-half years ago, and is now applying for a Nasdaq listing, Rose said.
In the reverse of senior exchanges, about 75 percent of the exchange’s capitalization comes from retail investors in the United States, Europe, Asia and Canada. The other 25 percent are institutional investors. Johnson said his goal is to move that mix to a 50: 50 ratio.
As of Jan. 1, the British Columbia Securities Commission implemented stricter and fuller disclosure requirements, Boddie said. Even private placements, through which come most stock listed on the exchange, must now supply the same information required for a prospectus. Prospectus requirements are uniform throughout Canada, even though Canada lacks a counterpart to the U.S. Securities and Exchange Commission.
