Legal software provider Dye & Durham Corp. has raised $150-million in an initial public offering, selling 20 million shares at $7.50, the high end of its initial range. The shares are expected to trade on the Toronto Stock Exchange as early as Friday, when the deal is set to close.
Demand exceeded available stock by more than $1-billion, prompting the company to increase its original fundraising target of $100-million. Sources familiar with the process said about 70 per cent of the offering, led by underwriters Canaccord Genuity, Scotia Capital Inc., BMO Nesbitt Burns and INFOR Financial Group Inc., was sold to Canadian investors, and about 93 per cent went to institutional investors. The underwriters have the option to buy another three million shares at the offer price. Many Canadian tech stocks have reached fresh highs in the pandemic, as investors bet on a hastening shift to digitization in many industries.
Of the gross proceeds, $127.5-million will go to the company. Investment vehicles affiliated with chief executive Matthew Proud and his brother, former chairman and outgoing director Tyler Proud, and long-time shareholder Wahi Investments Inc. are selling $22.5-million worth of stock. The Proud brothers are part of a group that made a late, unsuccessful bid to buy Torstar Corp. last week.
D&D had intended to go public in 2018, but bailed because of choppy market conditions. Investors were also cool to the fact that more than half of the offering would have gone to existing shareholders, mainly the Prouds. The company addressed investor concerns, with Tyler Proud giving up the chairman role and negotiating a $200-million credit agreement, of which $50-million was used to pay a dividend to shareholders.
The company, which earned pro-forma revenue of $60-million in the nine months ended March 31 and posted adjusted operating earnings of $31.4-million, plans to pay an annual dividend of 7.5 cents a share. It will use most of the IPO proceeds to repay debt.
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