Jason Chapnik’s Toronto-based merchant bank Intercap Equity Inc. turned a $33-million investment in Docebo Inc. into a $1.5-billion profit after the online learning company’s October, 2019, initial public offering on the Toronto Stock Exchange. Now, another Intercap portfolio company is heading back to Canada’s senior exchange for an encore performance.
On Monday, E Automotive Inc., an acquisitive, fast-growing digital automobile-auction-platform provider, filed to go public on the TSX in a deal led by Canaccord Genuity, CIBC World Markets and National Bank Financial. Other underwriters include Scotia Capital, Eight Capital, ATB Capital Markets and Laurentian Bank Securities.
Intercap’s equity stake is not disclosed, but it has a “significant ownership interest,” according to the prospectus, and four appointees on the eight-person board, including Mr. Chapnik, the chairman.
E Inc., as the Toronto company is known, has mushroomed in size in part from three acquisitions in the past year, and through a shift to online commerce during the COVID-19 pandemic. Demand for used vehicles has been helped by government stimulus cheques to individuals and a global chip shortage that has hampered availability of new vehicles, E Inc. said in its prospectus.
The money-losing company generated revenue of US$37.2-million in the first half of this year, more than triple the amount in the same period a year earlier. Revenue in 2020 was US$30.3-million, up from US9.7-million two years earlier.
E generates US$362 in fees per vehicle sold through its wholesale platform, and it has more than 1,000 dealer customers who pay US$609 a month to subscribe for additional features. The platform handled 115,000 transactions in the 12 months ended June 30. Gross transaction value on it in the first half of 2021 was US$949-million, up nearly fourfold year-over-year
E Inc. is making a big push to expand in the U.S. in part through more acquisitions. “Our goal is to make E Inc. an even greater business,” chief executive Jason McClenahan said in the prospectus.
One of the offering’s selling features is the track record of the team behind E Inc., which is where Mr. Chapnik comes in. The 51-year-old chairman and CEO of Intercap, which led a significant but undisclosed investment in what are now E’s main subsidiaries, EDealer Inc. and EBlock Inc. in 2017, has had one of the more eclectic careers in Canadian business.
As a young entrepreneur Mr. Chapnik, a McGill University business school graduate, founded fireworks retailer Kaboom Fireworks Inc., which grew to 75 outlets and is still family-owned.
While in his 20s, Mr. Chapnik made global headlines in 1998 when a company he founded bought the rights in to the .tv web address suffix from the Pacific island nation of Tuvalu for US$50-million. His The .TV Corp. was set to raise funding at a valuation of hundreds of millions of dollars when the dot-com bubble burst, and it was sold to Verisign Inc. in 2002 for US$62-million.
Mr. Chapnik had better luck with another internet company he chaired, Dealer.com, which sold online tools for automobile dealerships. That company was bought in 2014 by Nasdaq-listed Dealertrack Technologies in a deal valuing Dealer.com at US$1.1-billion.
He joined the board of Dealertrack, a web-based software provider to the auto industry, and that company was sold to Cox Automotive in 2016 for US$4.5-billion. “That story was a main underpinning in my career,” Mr. Chapnik told The Globe and Mail in 2019.
In its prospectus, E Inc. highlights the fact three of its chief-level executives worked at Dealer.com and/or Dealertrack, while Dealer.com co-founders Michael Lane and Richard Gibbs serve as directors with Mr. Chapnik. They have “the relationships and experience to provide similar success to E Inc.,” the prospectus states. Mr. Chapnik declined to comment when reached by telephone Monday.
Mr. Chapnik has remained an active investor in technology companies. Intercap’s website lists 24 such investments including Alayacare, 360insights, Getaround Inc. – and Docebo.
The online employee-training software provider was based in northern Italy but looking to raise money in North America and relocate its head office across the Atlantic when Mr. Chapnik met Docebo’s energetic CEO Claudio Erba in 2014. “About 10 minutes in I said, ‘We want to do this deal,’ ” Mr. Chapnik said in 2019.
Docebo went public in October, 2019, raising $75-million at $16 a share and the stock initially treaded water. But its valuation spiked along with other internet stocks after the pandemic forced people to turn to digital channels.
Docebo’s stock has traded around $100 recently, giving the company a market capitalization of more than $3-billion. Intercap, which owned more than 60 per cent of the stock at the IPO, has sold close to $260-million worth of it since the IPO but still has 13.6 million shares, worth about $1.3-billion on paper.
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