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Streetwise IPO issuers having a ‘Goldilocks’ moment as more companies look at going public

The logo of the company Lightspeed at the company offices in Montreal on Oct. 16, 2017.

Dario Ayala/For The Globe and Mail

A reduction in market volatility and a successful initial public offering by Montreal-based software firm Lightspeed POS Inc. could encourage more companies to go public this year.

The technology sector could make up a considerable proportion of those IPOs, as a number of private-equity owners are expected to exit their positions, according to a report published on Monday by PwC Canada.

“Concerns over interest rates have subsided, the global trade friction seems to have abated, Brexit has been priced in and we’re not close enough to the U.S. election for that to be a factor yet,” said Dean Braunsteiner, PwC’s national IPO leader.

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“It’s something of a ‘Goldilocks’ moment for issuers.”

The first quarter of 2019 saw eight IPOs raise a total of $327-million, according to PwC. That’s compared with nine new issues raising $157-million in the first three months of 2018, a quarter marked by high volatility.

Five of the companies that have gone public this year did so on the Canadian Securities Exchange, while two were on the TSX Venture.

Only one of this year’s IPOs was on the Toronto Stock Exchange – last month’s $240-million offering by Lightspeed, which provides retailers and restaurants with cloud-based software to help them manage point-of-sale and back-office functions. The 14-year-old company priced its shares at $16, above the $13 to $15 range it had originally announced, and boosted the deal size by 20 per cent, owing to strong investor demand.

Lightspeed’s successful IPO could inspire other Canadian tech companies to accelerate their own plans to tap the public markets for growth.

Meanwhile, IPOs by cannabis producers have begun to slow – only two of the eight companies that went public in the first quarter of the year are in the marijuana sector.

“That should leave a healthy level of capital that had been focused on cannabis looking for other opportunities,” Mr. Braunsteiner said.

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Not all sectors are poised to benefit, however. The potential slowdown in economic growth could leave consumer products companies on the sidelines, Mr. Braunsteiner noted.

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