On July 29, 2024, the Alberta Securities Commission (ASC) published its annual Alberta Capital Market report (Report), analyzing the province’s capital market in 2023 and contextualizing its performance in relation to Canada’s other major markets.

By aggregating information from ASC records, the TMX Group Limited, Intercontinental Exchange, Inc., SEDAR+ and Bloomberg Finance L.P., the Report examines the following key factors:

• all reporting issuers (RIs), listed and unlisted, on the basis of principal regulator (PR) or head off­ice;
• prospectus and prospectus-exempt financings;
• the Alberta registrant community; and
• energy commodity contracts transacted in Alberta.

In doing so, the Report presents several market trends and indicators that developed during 2023, cross-referencing its analysis across Alberta, BC, Ontario, and Québec.

Reporting issuers

Canadian reporting issuers

In analyzing RIs, the Report notes that the market capitalization of all Canadian-listed RIs (including foreign-based issuers) increased to $6.8 trillion (13%) during 2023. While Québec had the largest average issuer market capitalization at CA$3.8 billion, Alberta issuers had an average market capitalization of CA$2.2 billion. Ontario and BC had the smallest average 2023 market capitalizations at CA$1 billion and CA$0.2 billion, respectively.

In terms of industry, the oil and gas and utilities and pipelines industries represented a combined market capitalization of CA$567 billion (78%) for Alberta issuers. In BC, issuers in the mining industry represented CA$166 billion (47%) of the total market capitalization. For Ontario and Québec, financial services remained strong industries, totalling CA$463 billion (25%) and CA$362 billion (43%) of the provincial issuers’ market capitalization, respectively.

Among Alberta RIs, oil and gas, including oil and gas services, remained the leading industry by number of issuers, representing 118 (36%) of the total 326 issuers. Although the number of Alberta RIs has decreased by 25 issuers (17%) since 2019, the market capitalization of these issuers has increased over the same period, indicating fewer but larger issuers.

Aside from its robust oil and gas industry, Alberta was well represented by issuers engaged in di­fferent industries, with 70 issuers (22%) in the other industries category, 45 issuers (14%) in mining and 37 issuers (11%) in diversified industries. Over the past year, the amount of capital raised by Alberta issuers in select emerging industries, such as alternative energy, clean technology and financial services, increased from CA$3.5 billion to CA$3.9 billion.

Foreign reporting issuers

In 2023, there were 285 foreign RIs headquartered outside Canada, representing a decrease from the 322 foreign issuers at the end of 2022. By PR, Ontario foreign issuers totalled 125 (44%), followed by 115 (40%) foreign issuers in BC, with Alberta and Québec having 31 and six foreign issuers, respectively.

The market capitalization of foreign issuers increased to CA$2.7 trillion (25%) in 2023, with US-based RIs representing over half of such foreign issuers.

Financings in the prospectus and prospectus-exempt markets

Under Canadian securities law, issuers may raise capital from investors under a prospectus or rely on an exemption from the prospectus requirements.

Financings by Alberta issuers

In 2023, 403 distinct Alberta issuers raised capital under a prospectus or through the prospectus-exempt market, representing a 4.5 percent decrease from the 2022 level. Alberta prospectus financings grew by 108 percent, totalling CA$20.1 billion, while prospectus-exempt financings amounted to CA$9.8 billion, up 17 percent from 2022. Collectively, financings in Alberta were up 66 percent in 2023, totalling CA$29.9 billion.

Concerning securities distributed by Alberta issuers, debt securities were the most common, accounting for CA$17 billion (57%) of the total amount raised during 2023. Of the remaining total, equity securities comprised 22 percent, units made up 12 percent, and other securities amounted to 8.6 percent.

Throughout the year, the accredited investor exemption was the most widely relied-on exemption by issuers to distribute prospectus-exempt securities to Albertans, totalling CA$26.8 billion.

Investments by Albertans

In 2023, Alberta-based investors purchased CA$27.3 billion in distributions, down 2.7 percent from 2022. Albertans invested the largest portion of capital in funds and other financial vehicles, totalling CA$23.3 billion (86%) of distributions, with finance and insurance representing the second largest industry at CA$1.2 billion, a 54 percent decrease from 2022. For oil and gas issuers, investments decreased by 37 percent from 2022, accounting for CA$0.2 billion.

Outside the province, Albertans invested CA$9.9 billion in international issuers and CA$7.9 billion in Ontario-based issuers, up 4.8 and 43 percent from 2022, respectively.

Cross-referencing the total funds Albertans invested with the type of securities purchased, units were the most common in 2023, totalling CA$22.9 billion. Relatedly, Albertans purchased CA$1.6 billion in debt securities and CA$0.9 billion in equity securities, representing a decrease of 5.5 percent and 31 percent from 2022, respectively.

Alberta registrants

Under Canadian securities laws, individuals and firms (including corporations) that are in the business of trading or advising in securities, or who holds oneself out as engaging in such business, must either register with a securities regulator, self-regulatory organization, or satisfy an exemption from the applicable registration requirement.

Under Multilateral Instrument 11-102 Passport System, regulation and oversight of dealers and advisers is principally conducted by the securities regulator in the jurisdiction where the firm’s head off­ice is located. As of December 31, 2023, the ASC was the principal regulator for 109 of the 1,015 registered firms in Alberta, which remained almost identical from the 2022 level.

Given the separate registration categories, including the investment dealer, exempt market dealer or mutual fund dealer, a registrant can fall into more than one category; however, each requires registration under securities legislation. Of all Alberta PR registered firms, 47 (43%) were registered in a single category, 15 (14%) were registered in two categories, 46 (42%) were registered in three categories and one firm was registered in four categories.

Energy markets

Oil and gas and related utilities and pipeline industries continue to play a critical role in Alberta’s economy, representing 78 percent of the market capitalization of provincial issuers in 2023.

Concerning the energy trading market, the Report notes that the total number of energy contracts transacted on ICE NGX Canada Inc. in 2023 was 12,081 petajoules (PJ), down from 12,187 PJ in 2022. Looking at trading volume, physical Canadian natural gas (contracts with physical settlement) represented the majority, accounting for 81 percent, with physical United States natural gas accounting for 11 percent.

Conclusion

As the Report demonstrates, Alberta remains one of Canada’s most important capital markets, representing CA$723 billion in market capitalization at the end of 2023 and showing positive signs of growth and resilience.

For further information or assistance with the Report, please contact the authors, Diana Nakka, Charles Lewis, or Vivian Esmailzadeh or any other member of our Securities and Corporate Finance group.