A Vancouver decision-analytics software company is set to test public investor appetites for more Canadian technology stocks after a summer pause that followed a record run of initial public offerings on the Toronto Stock Exchange.
Copperleaf Technologies Inc. is expected to file a prospectus to go public with Canadian regulators as early as next week in a deal underwritten by Bank of America and BMO Capital Markets, a source familiar with the matter said. The company is looking to raise roughly $150-million and eyeing a market valuation of $1-billion-plus. The Globe is not identifying the source because they are not authorized to speak publicly on the matter. Copperleaf vice-president of information systems and operations Daryl Spencer declined to comment when reached by telephone.
The offering would be the first major Canadian tech IPO since Lifespeak Inc. raised $125-million in early July; investor reception for Copperleaf could serve as a bellwether for continued market interest in new Canadian tech stocks. Other Canadian tech companies are nearing decisions in the coming weeks on whether to go public this fall, including online education company D2L Corp.
The Lifespeak IPO capped off a torrid one-year stretch that saw 14 technology companies go public on the TSX. By comparison, there was a total of just 12 Canadian tech IPOs on Canada’s senior exchange in the 11 years ended December, 2019.
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But the stock performance of the new crop of tech stocks has been uneven. Legal software provider Dye & Durham Ltd. – which kicked things off with its July, 2020, IPO – payments provider Nuvei Corp. and cybersecurity company Magnet Forensics Inc. all saw their stocks soar. But others are trading below their issue prices, including telemedicine providers Dialogue Health Technologies Inc. and MindBeacon Holdings Inc., digital media company BBTV Holdings Inc. and farming technology seller Farmers Edge Inc.
Several other Canadian IPOs struggled this year. Aerospace technology builder MDA Ltd., and non-tech companies Boat Rocker Media Inc. and ABC Technologies Holdings Inc. had to cut their offering sizes and prices to complete their IPOs. Vendasta Technologies Inc., which sells digital tools to small businesses, and LED lighting maker LMPG Inc. pulled their offerings in the face of lower-than-expected demand (Vendasta completed a private financing instead) and investor relations software provider Q4 Inc. delayed its IPO. Uncertain market conditions weighed on others that had considered going public but decided to wait, including telemedicine provider Maple Corp.
Still, technology stocks and the IPO market continue to perform well in the U.S. and Canadian tech stocks have remained a bright spot overall this year. With sustained, heightened interest in digital stocks during the pandemic, observers expect Canadian tech IPO activity to remain higher than in prepandemic times.
“We’d love to have more [Canadian technology] companies consider the public markets and we would consider to take a close look at all of them,” said Jeff Mo, portfolio manager with Mawer Investment Management, which bought into five of the recent Canadian tech IPOs, all of which have since traded higher. “The market is still open for companies that want to access the public markets.”
But Mr. Mo said he wanted to see “a certain stage of development” and maturity in companies he would consider backing.
Copperleaf is believed to generate about $70-million in annual revenue and is growing by more than 30 per cent year over year, earning it a spot on several recent fastest-growing company lists, including the Deloitte Technology Fast 500. The company, which has about 350 employees, has been cash flow positive and profitable for years.
The company sells optimization software to blue-chip companies with extensive physical assets such as utilities and transport infrastructure giants. Copperleaf’s loyal clientele – few if any have ever dropped the product – use its products to analyze, plan and budget how to spend capital budgets over multiyear periods, with an eye toward minimizing business risks.
Copperleaf, which grew out of a consulting firm in the late 2000s, has raised little outside capital and is one of the few larger-scale Canadian software companies led by a woman. Chief executive officer Judi Hess joined Copperleaf in 2009 after serving as president of Creo Inc. followed by four years as vice-president with Eastman Kodak after the photography giant bought the Vancouver software pioneer for close to US$1-billion. Copperleaf’s top ranks are dominated by senior Creo alumni, including Mr. Spencer, chairman Amos Michelson and the chief financial, technology and marketing officers.
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