Investors' appetite for Canadian technology plays may be coming back after a five-year fast, with Miranda Technologies Inc. preparing to launch a public offering next week significantly larger than first expected.
The Montreal-based company, which makes software and equipment for the broadcast industry, priced an initial public offering late yesterday worth $141-million, or $11.25 a share, making it one of the biggest deals the technology sector has seen in five years. Just last month, Miranda had valued the deal at about $100-million.
Miranda is capitalizing on the trend of digitized content, selling more products to help broadcasters, production companies and others dish out high-definition television or entertainment over Internet-based networks. Sales were up 31 per cent in the first nine months of the year, to $69.2-million, compared with $52.9-million for the nine months ended Sept. 30, 2004.
The company will issue about 4.5 million new shares, adding about $50-million to its coffers. A handful of early investors, including SGF Tech Inc., the Business Development Bank of Canada and Desjardins Venture Capital LP, have agreed to sell a total of about eight million shares, almost double what they first planned to sell.
Miranda shares are expected to begin trading Dec. 8 on the Toronto Stock Exchange, under the symbol MT.
The IPO will be only the second major deal in the Canadian tech sector since the dot-com and telecom bust in 2000.
In April, March Networks Corp. raised $68-million going public. The Ottawa-based company, which makes Internet-based digital video surveillance products, issued its shares at $12 each. Yesterday, the stock hit an intraday high of $25.85 on the Toronto Stock Exchange. It closed up 45 cents or 2 per cent at $25.41.
In addition to breathing life back into the moribund technology sector, the Miranda deal gives Genuity Capital Markets its first major lead assignment since the investment firm was formed nearly a year ago by a handful of executives leaving CIBC World Markets Inc. BMO Nesbitt Burns Inc., Desjardins Securities and TD Securities Inc. are also involved in bringing Miranda's IPO to market.
Institutional investors have reacted favourably to the deal, especially after the initial investors agreed to sell more of their stake, thereby reducing the pressure on Miranda to issue more shares.
Jean-Philippe Choquette, portfolio manager at Fiera Capital Management Inc. in Montreal, said his firm agreed to participate in the deal after meeting with senior executives two weeks ago. "Miranda does quite well in HDTV. Growth is quite solid and they have good products and a well-diversified portfolio."
He said the company will need to use some of the proceeds to boost its sales force in Europe and Asia, where revenue growth has been almost stagnant.
In a recent filing, Miranda said the bulk of the cash will be used for working capital and general corporate purposes, including acquisitions.
Approximately $5-million will go toward debt reduction and another $5-million will go into research and development.
Miranda was created in 1990 and today employs about 350 people, with operations in the United States, Europe and Asia.
Last year, it reported a profit of $18.8-million, after losing $9.1-million in 2003. Sales in 2004 were $73.6-million, up from $52.9-million in 2003.
Several executives at Miranda come from rival Leitch Technology Corp., including Strath Goodship, the president and chief executive officer. He served as the Toronto company's director of engineering and later set up its European division. In September, Florida-based Harris Corp. agreed to buy Leitch for $592-million.