The Canadian technology IPO market is heating up despite recent choppiness for global stock prices.
Q4 Inc. of Toronto, an investor relations software provider, is set to resume its march to an initial public offering this week, more than three months after it paused plans to raise $150-million on the Toronto Stock Exchange, a source familiar with the matter told The Globe and Mail.
Meanwhile, Vancouver decision analytics software maker Copperleaf Technologies Inc. has upped the price and size of its IPO after receiving more than $1-billion in orders from investors for a planned $125-million offering. Copperleaf late Wednesday announced it had priced the offering at $15 a share, above its initial $11 to $13 per share price range and increased the size of the deal to $140.1-million.
The Globe is not disclosing the identity of either source as they are not authorized to discuss the matters publicly.
Q4, which filed to go public in the spring, put the brakes on its IPO process in June, despite favourable response from investors, and has never publicly explained the reason for the delay.
The delay, according to the source, was caused by one of the company’s business partners reaching out during the IPO process to renegotiate a contract. Q4′s leadership did not want that issue to distract from the offering, so the company decided to delay going public until after it had been resolved, which has now happened. The underlying issue is expected to be explained in the company’s revised prospectus, which could be filed Thursday, kicking the IPO process back into action.
In the meantime, Q4 has continued to generate results above its own internal expectations and developed plans for a mergers and acquisitions strategy, the source said.
Q4′s IPO was one of several to be pulled, delayed or priced downward in the first half of the year as investors gave an uneven reception to the busiest spate of Canadian technology IPOs since the dot-com boom. The most recent Canadian tech issuer to go public on the TSX was LifeSpeak Inc. in early July – which at the time was the 14th technology company do so over the previous 12 months. By comparison, there were just 12 Canadian tech IPOs on Canada’s senior exchange in the 11 years ended December, 2019.
Copperleaf kicked off the fall’s IPO slate on the TSX last month. In its preliminary prospectus, the company disclosed it has never lost a customer. It sells artificial intelligence-powered optimization software to large companies with extensive physical assets such as utilities and transportation infrastructure giants, who use the product to analyze, plan and budget how to spend their capital budgets over multiyear periods. Its offering is being led by underwriters Merrill Lynch, BMO Capital Markets and William Blair & Co.
Online learning provider D2L Corp. of Kitchener is also set to launch its long-awaited IPO this month, The Globe reported two weeks ago. Other companies proceeding with IPO plans on the TSX include subprime lender Propel Holdings Inc. and Montreal online advertising exchange provider Sharethrough Inc., which both filed preliminary prospectuses in the past week.
Q4 makes software for managing the investor relations needs of public companies. Its technology is used for online webcasts and earnings calls, and it organizes financial statements on the investor relations sections of company websites. It provides data intelligence services to companies, analyzing capital flows and capturing information on activist shareholder activities. The company has about 2,400 corporate clients, including Netflix Inc., Spotify Technology SA, Square Inc. and Shopify Inc.
The company’s software helps roughly half a million investors each quarter at virtual events, and about 12 million investors interact with its corporate customers each month through its network of investor websites. Q4 had $40.4-million in revenue in 2020, up 80.3 per cent from the previous year. The company lost $13-million last year, compared with an $11-million loss in 2019. New York venture capital firm Ten Coves Capital is one of Q4′s biggest investors, with a 24.5-per-cent stake prior to the IPO. CEO Darrell Heaps owns 4.9 per cent, or 2.9 million shares.
In its most recent updated prospectus in June, Q4 set a price range of $10.50 and $13 a share for its IPO. Q4′s underwriting team is led by CIBC World Markets, National Bank Financial and Credit Suisse Securities.
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