Canadian Private Equity

Abstract

We analyze more than 11,000 private placements raised in Canada between 1998 and 2004, before and after the adoption of two new rules, one extending the exemptions for private placements and the other reducing the escrow periods for restricted securities. Consistent with the findings of the Ontario Securities Commission, we observed considerable growth in the proceeds raised. However, this growth originates from funds (including financial institutions and limited partnerships). The regulation thus fails to facilitate the financing activities of small and medium sized enterprises, particularly non-reporting issuers. If the number of placements increased, the total amounts collected monthly by reporting and non-reporting issuers decreased slightly after the adoption of the new rules.