Magnet Forensics Inc., the first technology company based in Waterloo, Ont., to go public in 15 years, soared in its debut on the Toronto Stock Exchange.
Shares in the cybersecurity company, which is stacked with former BlackBerry Ltd. executives, opened at $22.50 Wednesday, or 32 per cent above the issue price of $17 set the day before. It closed the day up slightly at $22.90, giving the company a market value of $969-million.
The company originally set out earlier this month to raise $90-million at a range of $14 to $16 a share, but bumped up the price and deal size on Tuesday to $100-million after receiving more than $1-billion in prospective orders from investors, The Globe and Mail reported this week.
Magnet’s underwriters, led by BMO Nesbitt Burns Inc. and Canaccord Genuity Corp. and including CIBC World Markets Inc., National Bank Financial Inc., RBC Dominion Securities Inc. and Scotia Capital Inc., have the right to buy an additional $15-million worth of stock at the issue price in the month after the deal closes.
The IPO is the second successful new Canadian tech issue this week, after a $160-million offering by Vancouver online-course-platform provider Thinkific Labs Inc., which also faced strong demand during its deal marketing period. Thinkific stock closed 20 per cent above its $13 issue price in its TSX debut on Tuesday, and closed down 60 cents to $15 a share on Wednesday.
Two back-to-back successful Canadian tech offerings could bring a second wind to what, since fall, has been the busiest period for Canadian tech IPOs since the dot-com bubble. The market wobbled earlier this spring amid market choppiness as underwriters were forced to cut offering sizes and issue prices on IPOs by MDA Ltd., Boat Rocker Media Inc. and ABC Technologies Holdings.
Meanwhile, Saskatoon’s Vendasta Technologies Inc. still has not updated the market on its plans after struggling to raise money for an intended $100-million IPO.
Founded in 2009, Magnet sells software to law-enforcement agencies and companies that are at risk of cybercrime. Its software has also been used for investigations into human trafficking and child sexual exploitation. The company was founded by Jad Saliba, a former Waterloo police officer, and Adam Belsher, a onetime BlackBerry executive. Former BlackBerry co-CEO Jim Balsillie is chairman of Magnet.
Magnet is one of the few highly profitable technology companies to go public in Canada. It earned US$11-million in net income last year, or 21 per cent of its US$51-million in revenue, compared with a US$1-million profit on revenues of US$39-million a year earlier. Its earnings before interest, taxes, depreciation and amortization (EBITDA) were US$15-million in 2020, compared with US$3-million in 2019.
The company’s average recurring revenue per account has grown significantly, to US$9,400 per account in 2020 from US$5,100 in 2018 as it has expanded its offerings to the corporate world. The company has said it will use the capital to expand its customer base, develop more products, and to fund acquisitions.
Mr. Saliba, Magnet’s chief technology officer, is the only member of the C-suite that did not work at BlackBerry. Chief financial officer Angelo Loberto, chief revenue officer Craig McLennan, and chief strategy officer Scott Williams all worked at the former smartphone maker. Only five of the company’s 16 executives do not have previous BlackBerry experience. Magnet had 270 employees at the end of 2020.
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