Canadian Securities Exchange to buy National Stock Exchange of Australia, marking its first-ever acquisition

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Canada’s junior stock exchange is buying its much smaller Australian counterpart in hopes of replicating its domestic growth in the Land Down Under.

CNSX Markets Inc., the parent company of the Canadian Securities Exchange, announced plans late Sunday to acquire NSX Ltd., the operator of the National Stock Exchange of Australia. The all-cash transaction is quite small – at 3.5 Australian cents per share, it values the NSXA at roughly 16-million Australian dollars ($14.4-million) – though it is noteworthy for being the CSE’s first acquisition since it launched in 2003.

“There is a tremendous opportunity for these guys to do exactly what we did in Canada,” CSE chief executive officer Richard Carleton said by phone from Sydney.

“Australia is easily the most comparable market to Canada’s. We are the two markets that take pre-revenue companies into the public markets, with obviously a significant component of mining but also tech, life sciences and other sunrise industries.”

The NSXA, with 52 listed securities, is a small fraction of the size of CSE, which boasts more than 750 listed issuers. However, the NSXA has a much more storied history, stretching back nearly nine decades to when it was first established as the Newcastle Stock Exchange in 1937. It listed on the Australian Stock Exchange (ASX) in 2005 and took on its current name in 2006.

Mr. Carleton said the CSE has been interested in buying the NSXA for 15 years, but the pursuit became more serious last year when former ASX executive Max Cunningham joined the NSXA in June as managing director and CEO. Mr. Cunningham, a former Goldman Sachs executive who previously spent nearly a decade as head of listings at the ASX, also recruited others from the ASX to join the 13-person staff of the NSXA.

“When Max Cunningham came on about a year ago to lead the team and build it out, we saw the opportunity to really jump in and help them become a significant part of the Australian capital formation process,” Mr. Carleton said. “There is a real opportunity for them to recruit a significant percentage of the new companies coming into the market.”

Part of the growth plan is building a new technology platform for the NSXA, which should be completed in July, 2026.

“That is key for a variety of initiatives, like connectivity to the brokerage community and potentially trading ASX securities,” Mr. Carleton said.

For Canadian public companies, the deal could make it easier to list in Australia as well.

“We think there are ways we can potentially reduce the barriers of cost associated with a cross-listing in Australia,” Mr. Carleton said. “If you talk to a lot of the mining guys, the view is the Australian valuations tend to be a little higher than Canadian valuations, so we would expect to see potentially a number of Canadian companies looking to cross-list.”

The deal is expected to close in the third quarter, subject to approval of NSX shareholders and Australian regulators. Tom Caldwell, the CEO of investment holding company Urbana Corp. – the single-largest shareholder of CNSX, with a nearly 50-per-cent ownership stake – told The Globe and Mail via e-mail that he supports the transaction.

“This is a great acquisition,” Mr. Caldwell said. “It moves the CSE from a Canadian venture capital exchange into a potentially significant player in new resource developments globally.”

The CSE has been positioning itself in recent years to compete more directly with the TMX Group-owned Toronto Stock Exchange, including the early 2023 launch of a senior tier for the largest issuers on its platform. Months later, in June, TMX disclosed it was considering launching a new stock exchange specifically for “new categories of early-stage companies.”