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TSX Clean Technology Index Stocks Investor Interest

|Jul 5|magazine14 min read
Standard and Poor’s introduced the S&P/TSX Clean Technology Index to measure the performance of companies whose core business operations relate to green technologies in March. The recent clean tech developments and the 125 issuers between the TSX and TSX Venture affords the TMX Group the distinction as the world’s leading domicile of publicly-traded clean technology companies.

“[The index] came after two to three solid years of performance and interest in growth in clean technology practice,” says Chadda. “Last year our companies raised close to $2 billion in capital. Those 127 companies between the two exchanges raised a record for the clean technology practice.”

The TSX and TSVX enjoyed a record year in 2009 when global markets proved extremely volatile. Over $19 billion in total market capitalization is represented in the S&P/TSX Clean Technology Index with ISE Limited the latest to join the party.

“We had a $100 million geothermal IPO last year called Magma at a time when there were storm clouds all around the market,” says Chadda. “We had a $180 million geothermal deal last year in Ram Power.”

As if all that was not enough, roughly six to eight companies with market capital ranging from $50 to $500 million eye a coveted TSX symbol. The opening bell has only begun to ring for the Canadian Clean Technology sector, though.

Global Campaign

Chadda and colleagues just embarked upon a tour throughout the US at the end of June, which began in New York and concludes with the California Financing Series.

Chadda, Global Senior Manager of Business Development, Clean Technologies, Robert Peterman and team appeared at the TMX-sponsored Clean Technology & Sustainable Infrastructure Investor Day, hosted by New York Society of Security Analysts (NYSSA) at the end of June.

Chadda and Peterman were accompanied by CEOs of the leading clean tech companies currently listed with the TMX Group, including Magma Iceland Corp.CEO Asgeir Margeirsson, Plutonic Power Corp. CEO Donald McInnes, Algonquin Power & Utilities Corp. CEO Ian Robertson, Azure Dynamics Corp. CEO Scott Harrison, Electrovaya Inc. CFO Paul L. Hart and ISE Limited CEO Richard Sander.

Chadda, Peterman and the CEOs highlighted Canada’s renewable power and transportation infrastructure and green tech investment best practices and opportunities.

“There were two panels: one a transportation panel, which ISE Limited was a part of, and the other was a renewable power generation panel,” says Peterman.

The public relations campaign will conclude with stops in San Francisco, Los Angeles and San Diego with strategic introductory meetings between select clean tech companies and TMX representatives in September.

By then, the new S&P/TSX Clean Technology Index will have six months worth of data and possibly an accompanying exchange-traded fund (ETF) to further support Chadda and Peterman’s assertions.

S&P/TSX Clean Technology Index

Instituted at the end of March, the S&P/TSX Clean Technology Index lists 21 companies who have been clean tech verified by Jantzi-Sustainalytics, the research agency tapped to develop and maintain the Clean Technology Classification System.

“The index is a benchmark,” says Chadda. “That’s going to measure the market and put a target on the sector. The market itself will answer the questions, not us.”

Over $1.5 billion in equity capital was raised in 2009. The top-ten clean technology companies enjoyed a 341 per cent one-year average market capital growth with investors enjoying an average return on investment of 236 per cent in 2009.

The need for the S&P/TSX Clean Technology Index to monitor the rising stars of Canada’s public markets becomes abundantly obvious when analysing the exploding numbers.

“The idea behind the launch of the index was a couple of things,” says Alka Banerjee, vice president of S&P Indices. “Clean tech is the hottest sector in the world, especially in Canada and North America. It is attracting over 25 per cent of all venture capital funds, which is huge.”

Bull Market

Rising stars can be found on the junior TSXV such as BioExx Specialty Proteins Ltd. The Toronto company focuses on oil and high-value protein extraction from oilseeds for the global food market. BioExx experienced a 678 per cent market capital growth, and investors saw a 412 per cent ROI.

In ROI, Wavefront Technology Solutions Inc.’s investors saw the greatest gains at 463 per cent. The Edmonton company specializes in designing leading-edge solutions for oil well stimulation and environmental groundwater remediation. Wavefront finished with 554 per cent market capital growth for fiscal year 2009.

“Canada is home to quite a few of these companies. More clean tech companies call Canada home than any other exchange. It made sense to have an index highlighting these companies. The demand for it is absolutely there,” says Banerjee.

Furthermore, the Canadian financial system ranked as the soundest for the second consecutive year by the World Economic Forum.

“There’s a certain sweet spot where the Canadian model makes sense,” says Chadda. “We have a slightly more effective regulatory model for public companies at that mid-range, up to the half a billion market cap.”

Sustainable Development Technology Canada opened the TSX in mid June to celebrate the launch of the 2010 SDTC Cleantech Growth and Go-to-Market Report, which provides key benchmarks and insights into the emerging clean tech sector of the Canadian economy. The day after, Ram Power held the honors.

The closing bell is a long way off.