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The Ottawa headquarters of Canadian e-commerce company Shopify are pictured on May 29, 2019.

Justin Tang/The Canadian Press

Executives at Shopify Inc. have famously told Bay Street that they are not interested in making friends with bankers.

The Ottawa-based online retail software company stayed true to that mantra last week by successfully using its heft to win bargain-basement fees on its latest stock sale.

Shopify, Canada’s largest public company, raised US$990-million in last week’s sale that paid its bankers, mostly Wall Street brokerage houses, a relatively thin 1.75-per-cent fee. Traditionally, Canadian companies pay 4-per-cent commissions on stock sales done by domestic dealers. For Shopify shareholders, the difference in fees meant the company saved US$22.3-million by playing hardball.

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Last week’s transactions, which also included a US$920-million convertible debenture offering, were the latest in a string of nine financings from Shopify since the company went public five years ago, and the transactions were done for fees of between 0.96 and 1.86 per cent.

Most Canadian public companies use equity offerings as an opportunity to pay the brokerage houses that trade their stocks, offer research coverage and provide investment banking services. In contrast, Shopify consistently takes a more transactional approach, pushing for the lowest possible commissions and shifting its businesses among competing dealers. After a US$1.46-billion stock sale in May, Shopify senior director of investor relations Katie Keita said the company is “not out to make a bunch of friends among the banks.”

Shopify’s chief financial officer, Amy Shapero, is ultimately responsible for the company’s banking relationships. She joined Shopify in 2018 after serving as CFO or a senior finance executive at three large U.S. technology companies. Prior to that, Ms. Shapero was an investment banker covering growth companies for Credit Suisse and Goldman Sachs.

Other Canadian tech companies are willing to continue paying fees that are consistent with historic standards. Earlier this month, Montreal-based Lightspeed POS Inc. listed on the New York Stock Exchange and sold US$355-million of stock, and paid its bankers a 5-per-cent fee for their work on the deal. Last week, Nuvei Corp., also based in Montreal, raised US$700-million in the largest Canadian technology company initial public offering, and agreed to a 5.25-per-cent commission.

Each of Shopify’s recent share sales featured at least one new Wall Street powerhouse in a leading role, with Credit Suisse the only consistent player in a changing cast. Last week’s Shopify underwriting was led by Citigroup, Goldman Sachs, Credit Suisse and RBC Dominion Securities Inc. The last Shopify share sale, in May, was led by Credit Suisse and Citigroup. Last September, the company raised US$603-million in an offering led by Credit Suisse and Morgan Stanley.

Investment bankers who work for the company, or are pitching Ms. Shapero for business, say Shopify has made a conscious decision to use approaches to capital markets employed by many large U.S. companies, including selling stock through what are known as overnight marketed transactions. This type of deal sees a public company announce an equity offering, then set the price for the share sale a few hours later, after gauging investor interest.

For dealers, a marketed offering is far less risky than the bought deal approach typically used by Canadian investment banks. These transactions see the dealers guarantee the company a preset price for its stock, and shoulder the burden of selling the shares. In volatile markets, a poorly priced or badly timed bought deal can cost the banks millions of dollars.

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