Why Canadian IPOs are disappearing as delistings accelerate

Canadian IPO activity continues to thin as more companies leave Canada’s major stock exchanges, raising concerns about the long-term depth of the country’s public listings. The trend persists even as large-cap stocks have delivered strong performance.

BNN Bloomberg spoke with Dan Nowlan, vice chair at National Bank Capital Markets, who says the hollowing out of smaller publicly traded companies poses risks for job creation and capital access. He sees stronger potential for new listings in 2026, particularly among larger issuers.

Key Takeaways

• Delistings and take-private deals continue to outpace new IPOs, reducing the number of Canadian companies on public exchanges.
• Smaller firms struggle to draw institutional investor interest, limiting their ability to raise capital at fair valuations.
• A shrinking small-cap sector risks job losses, fewer head offices in Canada and diminished long-term growth.
• Investors increasingly prefer larger IPOs with strong liquidity and potential index eligibility at roughly $1.8 billion in value.
• Despite recent weakness, Nowlan says investor demand for Canadian IPOs remains healthy and expects stronger activity in 2026.

Read the full transcript below:

ROGER: Canadian IPOs are shrinking, and more companies are choosing to leave Canada’s primary stock exchanges, including the Toronto Stock Exchange and the junior TSX Venture Exchange. My next guest believes the market has hollowed out a little bit, and that it’s a concern. Let’s bring in Dan Nowlan, vice chair at National Bank Capital Markets. Dan, thanks very much for joining us.

DAN: Morning, Roger.

ROGER: This is a trend. It’s been going on for a while. Just how bad is it to you?

DAN: Well, I think, first of all, there’s good news and bad news. You’re right: since 2023, there have been about $125 billion worth of companies that have left the Toronto Stock Exchange and been taken private. Some have merged with other companies, some have been bought by private equity, and some have been bought by strategics. And there hasn’t been the IPO pipeline to replace those. Now, I would say over the last year, and going into 2026, we’re seeing a lot more companies considering going public again — but they do tend to be larger companies than we saw in 2021.

ROGER: Which I guess is the good part, that you’re seeing some coming back on as IPOs. But what you’re worried about is not seeing the smaller, small caps.

DAN: Yeah, well, the issue is that if Canadian small-cap companies can’t use the public markets to get capital at the right valuations, then they’ll start to look elsewhere. And if they get bought by, say, a U.S. strategic, then there’s a risk those jobs might not stay in Canada, those head offices might not stay in Canada, and Canada might become a secondary consideration for those small-cap companies. So it’s important for the country to maintain high-quality, good-paying, long-term, sustainable jobs — and to keep those companies active in the market and able to access capital efficiently.

ROGER: And we love to talk about the big ones, the Mag Seven and things like that. Just how important are the small caps?

DAN: They’re important economically, certainly. And we do hear from institutional investors that they feel there aren’t enough good-quality small-cap names in Canada to look at. And as I mentioned, about $125 billion of value has been taken private over the last two and a half years. Fifty-four companies were taken private in 2025 alone, and there were another forty-something taken private in 2024. So it’s a lot of companies that have left the market.

ROGER: How do we change that? How do you think you can change that?

DAN: There are things the government could do — for example, make it more attractive for investors to take risks. We’ve punished risk-taking in this country with a debilitating tax system. So the government could help there. And on institutions that have stopped looking at smaller-cap companies: they’re behaving rationally, because they’ve become larger and larger, and it’s tough for it to make sense for them to look at smaller caps. One way to help is to encourage retail investors to take a closer look at some of these companies.

ROGER: And just going back to the government — that’s always been a concern, really, that we’re too taxed. Has it gotten worse for those companies?

DAN: Yeah. If you look back since the financial crisis, and especially over the last 10 years, taxes have gone up incrementally. Last year the federal government tried to bring in even more taxes on capital gains, which led some people to take action. Ultimately that measure was repealed — but not before a lot of people reacted to it. So there’s been a continued lack of encouragement for people to take risks and invest in growth companies.

ROGER: And what’s the allure of going private? Is it just that the sale is hard to resist? Why are more companies doing that?

DAN: If you’re a smaller-cap company and you don’t have access to a proper valuation, there are lots of reasons you might go private. One is that it’s tough for you to make acquisitions, because your currency just isn’t appropriate for making acquisitions and becoming bigger. That’s one of the drivers. Each M&A story has its own story attached to it. But it’s easy for a successful small Canadian company that doesn’t have a proper valuation — if approached by a larger American strategic — to say, “You know something, that’s a pretty good opportunity, and that’s one way I can continue to grow with a partner.”

ROGER: And is there a danger that we could end up with a hollowed-out TSX or hollowed-out Canadian markets?

DAN: Yeah. What you’re seeing right now is that larger-cap companies have performed quite well. The TSX is up 25 per cent this year, so those companies have done quite well. They continue to grow; they’ve gotten bigger and bigger. The area of weakness I see is, again, that smaller-cap part of the market.

ROGER: And is this cyclical, or has this been something that’s been going on for a while?

DAN: The trend feels like it’s been going on for a while, but I would say it’s gotten more acute since the second half of 2021. In the first half of 2021, small-cap companies were successfully accessing the market — many of them technology companies. But since then, it’s been very difficult. If you look at the shareholder base of small-cap companies — companies with less than a $1.5-billion market cap — you’d see their institutional shareholder base is significantly smaller today, in 2025, than it was in 2020.

ROGER: Okay, Dan, thank you very much for joining us today.

DAN: Thank you very much.

ROGER: Dan Nowlan is vice chair at National Bank Capital Markets.

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This BNN Bloomberg summary and transcript of the Dec. 10, 2025 interview with Dan Nowlan are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.