Markham, Ont.-based real estate information provider Real Matters Corp. is set to close one of the largest Canadian venture financings in the past year, raising between $70-million and $75-million entirely from Canadian institutional investors, sources close to the company say.
The financing, led by the company's past financial advisers Bank of Montreal and Infor Financial Group Inc., will bring the total amount raised by the 12-year-old company to close to $200-million and positions the cloud software firm to go public this year – subject to the calming of turbulent public markets. that have hurt valuations of tech companies. "The plan is to take the company public later this year," one source said. The venture financing, which values the company at about $600-million, is expected to close by the end of the month, and will be used to finance at least one acquisition before the IPO, sources said. The company declined to comment on the impending deal.
Real Matters, led by financial technology and entrepreneurial veteran Jason Smith, provides a cloud-based platform called Redhive that allows U.S. financial institutions to gather mortgage appraisal information quickly and inexpensively using a network of tens of thousands of independent appraisers and insurance inspectors. The profitable company's annual revenue is believed to exceed $100-million and is growing by 70 per cent this year. The company, which counts some of the largest U.S. banks among its customers, also last year bought a U.S. home equity service provider called Southwest Financial Services.
Despite its rapid growth south of the border, the company has been unwilling to offer preferred equity to late-stage investors, favouring the continued issuance of common stock. That meant many late-stage U.S. venture capital firms were not willing to invest – but plenty of big Canadian asset managers, including Royal Bank of Canada, BMO, and Sentry Investments, were.
"It's definitely unique for a private company at this stage to have financed itself through common equity all the way" and for such a large tech offering backed almost exclusively by Canadian money, said a source familiar with the company. "it shows there is still capital out there ready to invest in growth outside commodities and energies. These funds have money to put to work."
The financing is the largest venture deal since last September's $79.5-million venture capital financing by Montreal retail software firm Lightspeed Retail – which also raised most of its capital from north of the border, largely from Quebec institutional investors.