Cross-Border Liquidity For US Issuers

Since mid-2001, the Canadian equity new-issue market has been dominated by income fund issuers and their like. For anyone who has even a passing familiarity with the Canadian capital market, this is an obvious observation; however, it may still be news or at least interesting for US issuers and their advisers to learn something about the liquidity options that may be available to them in the Canadian market.

In general terms, there are two ways in which Canadian liquidity can be realized: directly, by way of an initial public offering in Canada by the US issuer of income securities (variously called income deposit securities, income participating securities and enhanced income securities by different investment banks); or indirectly, through the acquisition of a US business by an established Canadian income trust or income security issuer. This article will provide background and insights on both these alternatives.