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Canada stock market operator TMX says IPO window shrinking

A logo for TMX Group, which operates the Toronto Stock Exchange in Toronto

By Divya Rajagopal and Huw Jones

TORONTO/LONDON (Reuters) - Canada's main stock exchange operator TMX Group is urging companies seeking to list on its platform to accelerate their plans, a top exchange official said, citing an uncertain economy and next year's U.S. presidential election as factors shrinking the window of opportunity.

Dean McPherson, head of TMX Global Mining, told Reuters on Tuesday that macro issues such as inflation and the Ukraine-Russia war are keeping capital on the sidelines, while the U.S. election should add to the uncertainty.

TMX is a destination for small to medium global energy and mining companies to raise equity, with close to 50% of index dominated by those two sectors.

McPherson said TMX has advised companies seeking to list that the "window of opportunity" for initial public offerings, when it opens, might be a short window of three to six months rather than a year.

"There is a pipeline out there that's waiting for the right time to enter the market," McPherson said. "And our advice to those companies is it's best to not just wait but have your entire ducks in a row if you will, so the when the window of opportunity opens, you don't have to start from scratch."

In a separate interview, TMX CEO John McKenzie said the exchange has about 1,600 companies in its IPO pipeline and more than half of them are technology based companies.

"The pipeline looks excellent. Timing looks questionable," McKenzie said, adding the recent uptick in U.S. IPO activity provides "good momentum" that will help Canadian IPO hopefuls.

On Wednesday, Softbank-backed chipmaker Arm Holdings raised $4.87 billion ahead of its Nasdaq listing on Thursday, where the stock jumped 10%.

Companies preparing for IPO usually go through a lengthy process marketing their offer.

Higher volatility and rising interest have held back companies from raising equity financing on the TMX, with IPOs down 78% to C$415 million ($306 million) between July 2022 and July 2023, according TMX data.

IPOs on the smaller TSX venture exchange dropped by 94% in the same period.

In Canada, the central bank has raised key interest rate to 22-year high of 5% to fight stubborn inflation.

($1 = 1.3567 Canadian dollars)

(Reporting by Divya Rajagopal; Editing by David Gregorio and Marguerita Choy)