Montreal payments-processing company Nuvei Corp. has priced its initial public offering at US$26 a share, well in excess of its original goal, in advance of its debut on the Toronto Stock Exchange in the next few days.
The company last week disclosed plans to raise at least US$600-million in its initial public offering, setting a price range of US$20 to US$22 per subordinate voting share as it kicked off its virtual marketing campaign with investors. Nuvei will get $625-million in gross proceeds from the offering of 26.9-million shares.
Two sources familiar with the deal said Nuvei and its underwriters increased the price range to between US$22 and US$24 this week based on strong investor demand, before settling on the final price, which was disclosed in a press release early Thursday morning.
The Globe and Mail is not identifying the sources because they are not authorized to speak publicly on the matter.
Investors who buy in will get a tiny voting interest in the company. Nuvei’s three existing shareholders – chief executive officer Philip Fayer, Quebec private equity firm Novacap and the Caisse de dépôt et placement du Québec – will have a combined 91.8 million multiple voting shares, with 10 votes apiece. The company’s preliminary prospectus filed with regulators last week anticipated subordinate stockholders who buy into the IPO will be left with less than 4.2 per cent of voting rights, despite owning a combined 28 per cent to 30 per cent economic interest.
However, according to the terms of the offering, if any of the three prior owners sell any of their stake, those shares would convert to subordinate stock. If any of the sellers' remaining multiple-voting shares fall to less than 5 per cent of that class of stock, the remaining holdings would become single-vote shares as well.
Novacap is the likeliest to sell down its stake, as private equity firms typically exit investments within a set period. Novacap was already planning to sell 3.57 million of its multiple voting shares in the offering as of last week. The release stated the shareholder will sell $75-million worth of stock in the offering.
The offering is being led by Goldman Sachs, Credit Suisse, BMO Nesbitt Burns and RBC Dominion Securities. The 14 underwriters on the deal stand to earn more than $36-million in fees and also have the right to buy 4 million shares at the offering price.
Nuvei, which provides payment-processing technology for online and in-store transactions, will begin trading in a hot market for tech stocks, albeit one that has been volatile this month. Shares of legal-software company Dye & Durham Ltd. and online-learning-software provider Docebo Inc. have soared since their TSX IPOs in the past year and 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.
Nuvei, founded by Mr. Fayer in 2003, grew steadily to become one of Canada’s largest private financial-technology companies. The company has 765 employees and 50,000 merchant customers globally across a range of industries, including online retail, online gambling and financial services. Nuvei generated revenue of US$245.8-million in 2019 and posted a net loss of US$69.5-million.
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