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Canada’s CNSX Markets Inc has launched a $17.6 million takeover bid for Australian secondary market operator NSX Limited (ASX: NSX) in a move aimed at giving early-stage ventures an alternative listing platform to access capital.
CNSX Markets, which operates the Canadian Securities Exchange (CSE), a market that currently hosts about 750 securities on its platform, acquired a 4.85 per cent stake in NSX on 7 May this year.
The Canadian group is willing to pay 3.5c per share to acquire all the paid-up capital in NSX, the company that operates the National Stock Exchange of Australia. The offer price compares with a close of 2.2c for NSX shares yesterday.
Originally founded as the Newcastle Stock Exchange in 1937, NSX is a secondary Australian market to the ASX for trading shares and securities. It currently hosts just 52 companies which are largely micro and small-cap enterprises, but NSX recently triggered plans to grow its base further.
The NSX board, which highlights similarities between NSX and CNSX Markets, has recommended that shareholders accept the offer in the absence of a higher bid.
The board especially notes the opportunities for companies listing on the NSX to gain broader access to global capital through the acquisition.
“The CSE’s own journey is consistent with NSX's annunciated strategy, and this development enables the natural next step in the evolution of Australia’s capital markets and NSX’s growth,” says NSX chairman Tim Hart.
“If approved by shareholders and ASIC, this transaction will boost Australia’s market competitiveness and expand the range of opportunities for companies seeking capital to grow and investors looking for diversity to build wealth.”
NSX posted an interim net loss of $1.9 million for the six months to the end of December last year, steady with the previous year, on marginally lower revenue of $732,401.
The company raised $1.13 million earlier this month after issuing about 44 million shares at 2.5c each. The funds are being used for working capital and the company’s “ambitious program” to increase the number of issuers listed on the National Stock Exchange of Australia.
NSX CEO Max Cunningham says an acquisition by CSE will provide NSX with “financial strength and operational stability” while bringing global expertise to local exchange activities.
“That is great news for participants and competition in Australia’s capital markets,” says Cunningham.
“The Canadian experience demonstrates that one exchange size does not fit all. Issuers and investors in Australia are keen to see a dynamic alternative to the larger, legacy incumbent.
“A stronger balance sheet enables NSX to expand our product offering, sharpen our customer focus, and provide Australian companies, brokers and investors liquid, reliable and well-regulated services.
“We believe, in a strong accountable and transparent regulatory environment underpinned by rules rather than opaque ‘precedent-based’ decision-making around waivers and other governance matters.”
Cunningham notes that the plan to rebuild NSX as a “credible alternative” for market listings began 12 months ago.
“This has resulted in renewed focus on an appropriate listings framework for small and emerging companies, revision of current listing rules, review of our technology stack and services, and a new team with extensive local and global exchange experience,” he says.
“The CSE will build on those foundations, including the completion of our tech review, and offer shared services in key areas such as technology and financial resources.”
The CSE says the acquisition will expand its geographic footprint by partnering with an exchange with a “similar focus and culture” to its own. The Canadian Exchange is focused on early-stage companies, with its key strength in the resource sector.
The Canadian company sees the National Stock Exchange of Australia as well positioned to "disrupt the exchange landscape" in Australia, in a clear sign that it wants to take on the ASX.
The existing management team will continue to oversee operations after a takeover, with support from the CSE which the Canadian group says will offer “a credible and service-oriented alternative for the capital formation and liquidity needs of emerging companies in Australia”.
“This transaction enables the CSE to expand its reach and builds on our success in attracting global listings,” says Richard Carleton, CEO of the CSE.
“Through our 21-year history, the CSE has grown to more than 750 listings by focusing on and supporting entrepreneurial companies. The NSXA, working with us, is poised to execute a similar plan in Australia.
“This transaction is exciting for issuers and investors. Both countries have highly developed capital markets with many common features, including a unique infrastructure that supports pre-revenue companies in the public markets.
“We look to build on the success of the CSE in Canada and help to provide competing exchange market services to Australian issuers and investors. We will create a collaborative environment where both exchanges can investigate inter-listing solutions for clients.”
The takeover is subject to NSX shareholder approval as well as a green light from the Australian Securities and Investments Commission. Once secured, the buyout is expected to be completed in the third quarter of 2025.
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