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Report On Business Canadian-led Ceridian plans to raise more than US$600-million in upsized IPO

Ceridian HCM Holding Inc. has upsized its planned initial public offering, saying it hopes to raise more than US$500-million selling stock to the public plus an additional US$100-million worth of shares to its private equity backers Thomas H. Lee Partners L.P. and Cannae Investors LLC.

Ceridian, a human resources software firm based in Minneapolis but managed by Canadian chief executive David Ossip out of Toronto, said Thursday that it plans to issue 21 million shares to the public at US$19 to US$21, with an option for its underwriting syndicate – led by Goldman Sachs, JP Morgan, Credit Suisse and Deutsche Bank – to buy an additional 3.15 million shares. Canada’s CIBC Capital Markets and Canaccord Genuity are also part of the underwriting syndicate. The stock will trade under the ticker CDAY on the New York and Toronto stock exchanges.

At the current range, Ceridian would have a market capitalization of almost US$3-billion.

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It plans to use net proceeds to redeem the US$475-million principal of its outstanding 11-per-cent senior notes due 2021 and pay a portion of the interest.

Ceridian, one of the oldest tech firms in the United States, became a hot cloud-software company under Mr. Ossip’s leadership after it bought his Toronto software firm Dayforce Inc. six years ago for more than US$100-million and made him CEO.

Mr. Ossip, who had previously led successful Toronto-based HR software firm Workbrain Corp., transformed Ceridian from a slowly declining payroll processor – whose dated software ran primarily on mainframes – into a savvy, web-based provider of subscription-software services, not just for payroll but other areas of HR management as well.

The Dayforce platform now has 3,000 customers, having grown at a compound rate of more than 60 per cent since 2012, with revenue of US$751-million last year. It is also considered one of the key disruptive forces in the HR services industry.

Mr. Ossip has been richly rewarded for improving Ceridian’s prospects after it struggled following a US$5.3-billion leveraged buyout in 2007 led by Thomas H. Lee and Cannae. He earned US$17.7-million in compensation last year, predominantly in option and share awards, and his 4.6 million shares would be worth more than US$90-million at the middle of the proposed price range.

As part of the transaction, Ceridian said it will spin out to existing shareholders its interest in an online-software platform called LifeWorks, which employers use to offer assistance and wellness programs – as well as perks and discounts – to employees.

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