Paul Loucks, chief executive of Halogen Software.Jim Young
In both Canada and the U.S. the tech sector showed strength in the early part of 2013, and a number of new issues came to market south of the border. Now, a bellwether is stepping out on the Toronto Stock Exchange.
Halogen Software Inc. hits the TSX this morning under the trading symbol HGN. "At this point in time we thought it was a great opportunity to go to the markets and raise additional capital," said Halogen's chief executive Paul Loucks.
The Ottawa-based company sells talent management software, which includes recruiting, learning and development, and compensation. Halogen said Monday that the company had filed its final prospectus having raised $50-million selling shares to investors at $11.50 each.
Halogen is the first tech IPO reach the TSX since Vancouver-based video surveillance company Avigilon Corp. crossed over in Nov. 2011. Since then, the stock has risen more than 235 per cent, as Streetwise noted earlier this week. That IPO originally raised gross proceeds of $21-million, and proceeds of $5-million in a secondary offering.
But where Avigilon stands out as a winner, there have been other less-successful newcomers. In mid-2011, a cloud software company called NexJ Systems Inc. hit the market after selling shares for total gross proceeds of $44-million. Today, that stock is down 70 per cent.
Other companies outside the tech space have also been wary of listing, with some citing "market conditions" as the main deterrent.
One area where market volatility hasn't been an issue is in the real estate space. Real estate investment trusts dominated the new listings through the first third of the year.
Whether more tech companies will follow Halogen and wade into the market remains to be seen, but there's at least one more waiting in the wings: In April, semiconductor company ViXS Systems announced its own plan to come to market. So far, it has reportedly piqued much investor interest and its valuation could be higher than any of the tech IPOs the market has seen in recent years.
But Mr. Loucks insists that for Halogen, it was the amount of business opportunity he could see, and not stability in the markets that prompted the company to head over to the TSX. Halogen targets mid-sized companies with between 100 and 10,000 employees for its clients. "Our competitors primarily focus on the enterprise side of things, and I think there's a really interesting market here in the mid-market," he said. Right now, 82 per cent of the company's revenues come from the U.S., but it targets growth opportunities around the world.
(Jacqueline Nelson is a Globe and Mail Financial Services Reporter.)
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