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E Automotive Inc. EINC-T is ending its adventure as a public company with more of a whimper than a bang, as it plans to delist from the Toronto Stock Exchange only 17 months after its shares started trading.

The company runs an online auction platform for automotive dealerships and is better known as E Inc. It went public at a $1-billion valuation in November, 2021, but two weeks later the Nasdaq Composite index peaked. The market has been mostly misery since for small- and medium-sized technology companies.

E Automotive went public at $23 per share and raised $135-million – only 13 per cent of the total company was sold to public investors – but its stock closed at $3.05 on Monday. Despite speculation that heavily discounted tech stocks could be acquired by private equity firms for cheap, what E Automotive has decided on amounts to more of a disappearing act.

The company’s depressed share price may only be making things worse, so E Automotive is walking away from the TSX.

In a statement late on Monday, company management said they had considered alternatives, including a takeover, but ultimately determined the benefits of delisting “outweighed the benefits of a going private transaction in the company’s current circumstances.” The company did not return a request for comment.

After the delisting, existing shareholders will continue to hold their stock – but it won’t trade anywhere. To address this liquidity issue, E Automotive will launch a share buyback program to repurchase up to $7.5-million worth of its existing shares at $3.50 each, giving some shareholders a way out. The company currently has a market value of $160-million.

Existing shareholders have already voiced support for the delisting. E Automotive is controlled by Intercap Equity Inc., a Toronto-based merchant bank that owns 72 per cent of the company, and Intercap backs the move. Holders of about 59 per cent of the remaining shares have also voiced their approval, the company said in its statement.

E Automotive’s connection to Intercap made it appealing to prospective public investors during the IPO, which was led by Canaccord Genuity, CIBC World Markets and National Bank Financial. Intercap had previously backed Docebo Inc. DCBO-T, which makes online employee training software, and Docebo’s shares had soared to roughly $100 each, up from $16 at the time of the company’s IPO. (They have since lost about half their value.)

The hope, then, was that E Automotive would replicate Docebo’s stellar run.

The reality: It has done anything but. The tech crash has been particularly gruesome for companies that do not make money, and E Automotive is in that camp. It lost US$63-million in 2022 and US$23-million in 2021.

The sector-wide correction has hurt most Canadian tech companies that went public during the pandemic boom. Although some have performed well – Magnet Forensics was just sold to a private equity firm for 160 per cent more per share than its IPO price – far more have struggled. BBTV Holdings Inc. BBTV-T is down 98 per cent from its IPO price, and Q4 Inc. has lost 68 per cent since its IPO.

In its reasoning for the delisting, E Automotive explained that its shareholder base has turned over dramatically since its IPO. Institutional shareholders made up more than 90 per cent of purchasers in the IPO, but most sold quickly, with the majority exiting before E Automotive had reported a single quarter as a public company. As of today, 95 per cent of institutional investors that bought into the IPO shares have sold, the company said.

Because so many large shareholders have already exited, and because only a small portion of the company’s outstanding shares are available on the open market, E Automotive’s stock hardly trades. The company felt it would be better simply to delist, helping avoid costs such as listing fees.

“Should market conditions and company performance improve, the company may seek to list its shares again in the future in connection with investment from institutional investors,” E Automotive said in its statement.

With a report from Sean Silcoff

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