Shares in Pivotree Inc. jumped by as much as 35 per cent Friday in their public debut on the TSX Venture Exchange after the Toronto e-commerce company raised $60-million in a heavily oversubscribed initial public offering.
Pivotree, led by Bill Di Nardo, founder of Canadian e-commerce pioneer Grocery Gateway, originally set out this month to raise $35-million by selling up to 5.4 million shares at $6.50 to $7.50 apiece. The offering was underwritten by Canaccord Genuity, National Bank Financial, Cormark Securities and Paradigm Capital.
However, as The Globe and Mail reported last week, the company was overwhelmed by more than $600-million worth of orders for the stock – more than 17 times the original offering, which prompted the company to nearly double its size, selling 7.06 million shares at $8.50 each. The underwriters have an option to buy another $9-million worth of stock at the issue price.
Roughly 80 per cent of demand came from institutional investors, a significant amount for a tech issue on Canada’s junior exchange. The offering benefited from Mr. Di Nardo’s reputation as a veteran e-commerce operator as well as a boom in online commerce during the pandemic. Homebound consumers have increasingly turned to websites for purchases.
By comparison, a $172-million offering by Vancouver online video company BBTV Holdings Inc. this week on the Toronto Stock Exchange only attracted orders equalling about two times the offering. That’s significantly less coverage than other recent new issues by Canadian tech companies Nuvei Corp. and Dye & Durham Ltd.
The heavy demand for Pivotree stock helped keep the shares well above the issue price Friday despite broad declines for stocks. Pivotree closed at $10.50, or 23.5 percent above its issue price.
By contrast, BBTV shares fell 12.4 per cent Friday and have now dropped 23.4 per cent since going public at $16 a share on Wednesday.
Pivotree is a technology-services company that manages e-commerce operations for medium to large companies, using tools from software providers including Shopify, Elastic Path, Oracle and SAP. Its 150-plus clients include retailers Aldo, Farm Boy, Princess Auto and Simons, branded-product makers Electrolux, Mitsubishi and Polaris, and Thomson Reuters and Boeing.
Mr. Di Nardo’s private capital company, Eventi Capital, first invested in Pivotree’s predecessor in 2007. Eventi bought out founder Brian Shepard in 2015 and Mr. Di Nardo took over, pushing the company to increasingly move its offering onto cloud-hosting services. In 2018, Pivotree bought two e-commerce technology-service providers that expanded its capabilities to implement Oracle and SAP tools and helped Pivotree nearly triple revenue to $59.7-million in 2019 from 2017 levels.
Pivotree’s non-recurring revenues have taken a hit because of the pandemic, but overall revenues in the first half of $30.8-million were 8-per-cent higher than the same period in 2019, driven by a 16-per-cent gain in recurring revenues. Pivotree lost $2.9-million in 2019.
Canadian tech stocks have had a strong year in line with global trends as Docebo, Dye & Durham and Nuvei traded up sharply from their IPO prices. But tech shares have been hit by overall market volatility in recent days.