Capital markets: income fund product big hit in Canada.

• Author: Marshall, Jeffrey
• Position: BusinessBRIEFS - Brief Article

A year ago, not that many U.S. business owners could probably even name the major stock exchange in Canada, but today the prospect of going public on the Toronto Stock Exchange is becoming increasingly popular among U.S.-based companies.

"Unlike in the United States, Canada's equity capital markets are enjoying a period of significant activity, in large part due to its income fund product," said Jeffrey Singer, a partner with Toronto-based Stikeman Elliott LLP and an authority in the field of cross-border transactions.

Owners of U.S. businesses can transfer their businesses, royalty streams or properties to an income trust, according to Singer. The tax-efficient structure of the Canadian income fund enables U.S. business owners to exit or raise capital at valuations that would otherwise be unobtainable in conventional domestic common or high-yielding preferred offerings.

Over the past year, at least five U.S. businesses--ranging from a school bus company to a funeral home operator--have launched public offerings in Canada, and many others are in the pipeline.

Among the advantages, says Singer:

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