We’re selling Canada to big foreign investors. Why not sell to Canadians, too?

Darcy Morris is chief executive and co-founder of Ewing Morris & Co. Investment Partners Ltd.

In May, 2021, Waterloo-based Magnet Forensics debuted on the Toronto Stock Exchange with a valuation of $969-million. Less than two years later, U.S. private equity firm Thoma Bravo agreed to take it private for about $1.8-billion.

Investors did very well. But Canada lost a publicly traded company.

A year ago, I argued in these pages that Canada’s public markets were caught in a negative selection bias: Our best companies were being acquired, taken private or never listing at all. I have served on five public-company boards and three ultimately ended in take-private transactions. This left behind, on average, a smaller, less liquid and less attractive public market – and a less vigorous economy. That problem has not gone away. But now Canada has a rare opportunity to do something about it.

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On Sept. 14 and 15, about 250 people from nearly 100 investment organizations across 28 countries will meet in Toronto at the Prime Minister’s invitation. The pitch itself is to attract $1-trillion in total investment over five years, supported by about $280-billion of federal capital and incentives. This is the right initiative. A decade of lacklustre growth in Canada means asking the world plainly for capital is overdue.

The summit is understandably not billed as an initiative to attract capital to the TSX. In fact, with the Carney government’s focus on building infrastructure, public markets appear to be the furthest thing on Ottawa’s mind.

But the summit also gives Ottawa considerable leverage over what gets built and how. If taxpayers are going to help finance the next generation of Canadian businesses, we should think about whether they should have the opportunity to own them.

Is Carney a closer? The Canada Investment Summit will be the ultimate test

That is why public markets should be part of that discussion. Public markets let a small company grow faster than it otherwise would have. An initial public offering lets a company raise money, establish a market price, broaden its ownership, and eventually grow into a company large enough for global institutions to own.

And the positive effects spill over, ranging from job creation in the surrounding area to sparking the start of other businesses. Importantly, public markets also give ordinary Canadians a direct way to participate in Canadian enterprise, to own companies alongside big investors and reap the rewards of that. Thriving public markets are the foundations of a prosperous economy.

Yet the number of operating companies listed on the TSX and TSXV fell from 3,595 in 2008 to 2,047 by the third quarter of 2025, a decline of roughly 43 per cent.

Nor is the IPO pipeline replacing what leaves. In 2008, the two exchanges produced 96 operating-company IPOs. In 2024, they produced five. Through the third quarter of 2025, they produced three.

That is how negative selection becomes self-reinforcing. Fewer good companies mean less liquidity and scale. That makes the market less useful to large investors, and going public less attractive to entrepreneurs. This leads to fewer IPOs and listings and more take-private deals, as big investors buy the whole company instead of a piece of it. We are harvesting the redwoods and not planting enough seedlings.

There is nothing inherently wrong with a take-private. Shareholders often receive a premium and the new owner may continue investing in the business. But there is a broader cost when successful companies continually leave the public market and too few replace them.

CPP Investments CEO John Graham recently made the case for the summit using a number that gets to the heart of this issue. Most global investors, he said, have 1 per cent or less of their portfolios in Canada. To match Canada’s share of global stock market capitalization, they should have two to three times that. He is right. But we are asking the world to own more of Canada while the supply of listed Canadian companies is shrinking.

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The investment summit – effectively a platform for the Carney government to present its $280-billion of anchor capital - offers Ottawa a chance to address both problems at once.

Not every investment belongs on a stock exchange. Capital that finances an airport or a new energy project may never become a publicly traded company. But where Ottawa is investing significant capital or incentives to help create or scale a Canadian company, they can structure the terms to encourage a future Canadian public listing.

Telesat is an instructive example. Ottawa created the company in 1969 as a public-private enterprise, with the federal government and Canada’s major telecom carriers each providing half the equity and sharing the cost. The original structure contemplated eventually selling part of the company to the Canadian public.

But when Telesat became successful, Ottawa sold its stake to consortium of telecom companies rather than through the public market. Telesat did not trade on the TSX until 2021 – 52 years after its creation.

Ottawa is now investing again with a $2.14-billion loan to finance Telesat’s Lightspeed network. This financing shows how much leverage comes with public capital. Ottawa negotiated requirements that Telesat remain Canadian controlled and headquartered, spend billions of dollars in Canada and give taxpayers upside participation through warrants. Telesat is already public today, so a listing incentive was not relevant. But for private Canadian companies this summit may help build, it should be one of the outcomes Ottawa seriously considers.

Contrast Telesat with Canadian National Railway. Three years after selling its Telesat stake privately, Ottawa made a different choice with CN. In 1995, it took CN public, capped any single shareholder and required the head office to remain in Montreal. CN was a Crown corporation being sold, not a private company taking federal support, so the circumstances were different to the issue at hand. But what is notable is how Ottawa treated the creation of public equity as a principal factor in the asset’s monetization. Thirty years later, CN is one of Canada’s great public companies.

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One approach would be to make significant federal support repayable at a premium if the business is sold privately within a defined period and forgivable if the company lists publicly. Anyone can still acquire the company, but they pay back the public’s interest first. This is not an argument against foreign ownership. It is a simple principle: If taxpayers help build an important Canadian business, Canadians should have a reasonable chance to own it.

This investment summit will not reverse a decade of shrinking listings. But if Ottawa is prepared to put hundreds of billions of dollars of public capital and incentives behind a domestic investment agenda, some of that leverage should replenish the public market.

When the summit ends, the easiest scorecard will be the dollars committed. I hope it is an enormous number. The harder question is what Canada will have built after those dollars are deployed. Five years from now, will we have created more companies capable of becoming the next CN or simply watched more of our best companies and assets find new outside owners?

Let’s not confuse selling Canada with building Canada.

Prosperity’s Path