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Sustainable Canadian startups, innovators join NEO Exchange

The TSX remains Canada’s primary stock exchange, but the NEO Exchange is rapidly gaining traction...

IMAGE: NEO Exchange logo. The TSX remains Canada’s primary stock exchange, but the NEO Exchange is rapidly gaining traction as an attractive place for startups, innovators and companies in the sustainability sector.

The NEO Exchange is home to 234 unique listings and is actively seeking to help grow companies in the innovation economy. The exchange accounts for nearly 15 per cent of all Canadian trading volume and has established itself as a legitimate alternative to the TSX by providing a dedicated exchange geared toward corporate players in the green tech and energy sectors.

During the first two quarters of 2022, the NEO Exchange has continued to demonstrate solid growth by adding several promising companies in the sustainability sector to its listings portfolio, despite the overall economic downturn and global stock market selloff.

Since the beginning of the year, the exchange has added $1 billion to its market cap by bringing on board 16 new corporate listings and 47 new listings overall. NEO rolled out 24 new ETF listings that boosted its ETF market cap by another $1 billion, as well as three ETF migrations from the TSX that contributed a further $1.6 billion in market cap.

The flood of new ETF listings, which includes several green and decentralized finance sector companies, follows the 2021 launch of NEO’s Canadian ETF Market.

Base Carbon

One of the key new 2022 sustainable listings on the NEO Exchange is Base Carbon, which began trading on the exchange in March under the symbol BCBN.

The firm provides capital, development expertise and management operating resources to projects involved primarily in voluntary carbon markets and the broader ESG (environmental, social, and corporate governance) economy. Base Carbon is also focused on technological innovation to enhance efficiencies, commercial credibility and trading transparency for carbon sector companies.

“With commitments from governments around the world to achieve net-zero greenhouse gas emissions by 2050, the demand for carbon credits and the need for carbon reduction projects has soared,” said Jos Schmitt, the president and CEO of NEO, in the announcement.

“Base Carbon is at the forefront of this incredibly promising industry, paving the way for a solution to the looming climate crisis. We are honoured to be the stock exchange of choice for Base Carbon, as they make carbon projects and carbon credits more accessible to investors who are looking to be a part of the solution while generating investment returns.”

Michael Costa, CEO of Base Carbon, confirmed the consensus view of many growth companies in the sustainable sector which believe NEO serves as a niche market that provides “greater access to a broad base of equity investors and financing partners.”

Added Costa: “Listing on the NEO Exchange is a transformative step for Base Carbon . . . We are optimistic about our future and are committed to our goal of being a trusted carbon partner in aiding organizations to achieve their net-zero commitments . . . as we develop a portfolio of carbon reduction projects globally.”

EVT Technology

The Base Carbon listing follows in the wake of many similar corporate additions to NEO’s green listings in the first half of 2022. One of the most important of these is the EV Technology Group, which chose to go public on NEO in April and trades under the symbol EVTG.

Headquartered in Toronto, the EVT Group focuses on developing and commercializing electric vehicle technologies and enables luxury, classic and heritage automobile companies to make the switch to electric, battery-powered engines.

The company is the largest investor in MOKE International, the manufacturer of the Mini Moke, a car brand made famous by James Bond and Brigitte Bardot in the 1960s and ’70s.

“EVT Group (is able) to invest in iconic brands to public market investors while enjoying the electric revolution that is happening in the automotive space,” said Wouter Witvoet, CEO of EVT Group, in that announcement. “By focusing on iconic brands that have existing brand equity, we significantly reduce the investment required to bring our vehicles to market.”

 NEO’s “entrepreneurial business model”

According to Witvoet, one of the principal advantages of listing on NEO is that EVT’s “entrepreneurial business model requires an exchange that shares a similar mindset.”

In welcoming EVT Group to NEO’s rapidly expanding green stable of companies, Schmitt underscored the company’s commitment to sustainability in his own statement.

“[Launching on NEO] provides an incredible opportunity for investors to tap into the electric vehicle revolution, and the green economy at large. EVT Group’s strategy, coupled with a highly-capable management team, positions them for great success in the public domain.”

Added Schmitt: “The NEO Exchange is home to some of the most innovative public companies, making it the ideal fit for EVT Group.”

Green ETF

Rounding out NEO’s very big half-year of listings was the launch of Wealthsimple‘s Green Bond ETF on January 21. This green ETF was created to match the performance of the Solactive Green Bond Index, which invests primarily in investment-grade green, social and sustainable bonds.

It is the newest addition to Wealthsimple’s portfolio of clean, green, sustainable and diverse investments that found a welcome home on the NEO Exchange.

“ESG and socially responsible investment solutions have skyrocketed in demand over the past few years, and we are honoured that Wealthsimple has chosen to list WSGB on the NEO Exchange,” said NEO’s Schmitt in making that announcement. “It is a true pleasure to serve as the listing partner for an organization that shares our commitment to building a better tomorrow.”

Ben Reeves, chief investment officer of Wealthsimple, sees his company’s green bond as yet one more step in the path toward global decarbonization. The green bonds are helping finance solar projects and wind farms.

“We are increasingly re-evaluating our existing investment products to find ways to improve the availability of ESG investing options available to our clients . . . We view it as our responsibility to help provide the capital needed for the transition to a low carbon economy while getting our clients good investment outcomes,” Reeves said in the release.

“We see this newest ETF as an opportunity to make impact investing through green bonds more accessible to all Canadians.”

Green bonds typically fund sustainable energy sector initiatives and the Wealthsimple ETF currently supports solar projects in Virginia, wind farms in Denmark and light rail in Ontario.

Cboe acquisition of NEO

Last November, the NEO Exchange (via its corporate parent, NEO) was acquired by global exchange giant Cboe Global Markets, the Chicago-based owner of the largest options exchange in the U.S., the Chicago Board Option Exchange.

The deal closed on June 1, bringing NEO into the Cboe’s international market infrastructure.

Schmitt, who co-founded the company in 2015, will remain in his current position. In comments made to The Globe and Mail last November, he stated the acquisition was consistent with NEO’s five-year expansion strategy.

“We started looking at various options of how to accelerate growth. We thought about raising capital, doing an acquisition ourselves, but Cboe emerged at the right time and we felt the acquisition was the ideal scenario for us.”

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