Montreal online payments company Nuvei Corp. has closed the largest technology initial public offering ever on the Toronto Stock Exchange, raising US$805-million in gross proceeds.
Nuvei, which began trading last week, said Tuesday it sold US$730-million of subordinate voting stock in the offering, while shareholder Novacap Management Inc. sold an additional $75-million of its shares, at US$26 apiece.
The stock soared in its debut last Thursday and closed Tuesday at US$34.12 a share, up 31 per cent from its IPO price. The stock, which is quoted in both U.S. and Canadian currency, also closed at $46.10, giving the company a market capitalization of close to $6-billion, making it one of Canada’s most valuable publicly traded technology companies.
Nuvei originally set out to raise US$600-million in the offering, and topped it up to US$700-million after the issue was 20 times oversubscribed. The final tally increased by more than US$100-million when the company’s 14 underwriters, led by Goldman Sachs, Credit Suisse, Bank of Montreal and Royal Bank of Canada, exercised their option to buy more than four million shares at the issue price.
The deal is the fourth successful new Canadian tech issue on the TSX since March, 2019. It follows IPOs by Lightspeed POS Inc., Docebo Inc. and Dye & Durham Ltd. They have all received a boost during the COVID-19 pandemic from a surge in investor interest in companies benefiting from a hastened shift to digital commerce. The S&P/TSX information technology index is up more than 33 per cent this year, led by Shopify Inc., Canada’s most valuable company.
Investor enthusiasm for tech stocks has prompted other domestic software companies to consider going public, including online-learning provider D2L Corp. of Kitchener, Ont., and Montreal telemedicine startup Dialogue Technologies Inc. Both met with investment bankers recently to explore the option.
Meanwhile, the U.S. is on track to have its strongest year for IPOs in six years and the busiest September by deal count since 1999, Bill Smith, chief executive officer of U.S. IPO tracker Renaissance Capital, said last week.
Nuvei, founded by CEO Philip Fayer in 2003, had 765 employees as of June 30 and 50,000 merchant customers globally across a range of industries with an increasing digital presence, including e-commerce, online gambling and financing services. Nuvei generated revenue of US$245.8-million in 2019 and posted a loss of US$69.5-million. It handled US$35-billion of transactions for its customers in the 12 months ended June 30.
Investors who buy in will get a tiny voting interest in the company. Nuvei’s three existing shareholders – Mr. Fayer, Novacap and the Caisse de dépôt et placement du Québec – will have more than 96-per-cent voting control of the company after the offering through their multiple-voting shares, despite owning 73 per cent of the equity. If any of the multiple-voting-share owners sell any of their stake, those shares would convert to subordinate voting stock with one vote each.
Nuvei is looking to expand in part through acquisitions. In 2019, it nearly doubled its size with a US$872.5-million acquisition of London Stock Exchange-listed payments-services provider SafeCharge International Group Ltd. It’s also buying Dutch company Smart2Pay for €221.6-million ($345-million).
Nuvei saw year-over-year growth in transaction volumes spike to a gain of 28.4 per cent in June, compared with a 15-per-cent increase in early 2020. “We believe the COVID-19 crisis will act as a catalyst in further accelerating mobile commerce and e-commerce transactions,” Nuvei said in its prospectus.
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