ExactEarth, a subsidiary of Cambridge, Ont.’s Com Dev International Ltd.
Despite the string of successful Canadian initial public offerings this year, exactEarth Ltd. announced Friday that it is postponing its own, proving that equity markets are starting to show signs of stress.
ExactEarth, a subsidiary of Cambridge, Ont.'s Com Dev International Ltd., hoped to raise $80-million and list on the Toronto Stock Exchange. However, the company decided to pull its offering because of "challenging conditions in the capital markets."
The decision comes after a number of Canadian companies from a wide range of sectors went public in the first seven months of 2015. These include Sleep Country Canada Holdings Inc., TMAC Resources Inc., and Spin Master Corp., which started trading on Thursday. But lately there have been worries that market swings, prompted by concerns about China's economic slowdown and uncertainty about Greece, would make it harder to sell new deals.
"There's been a lot of volatility in the last couple of weeks in markets," said Brent Layton, director of investment banking at Canaccord Genuity, which served as exactEarth's lead underwriter. "There have been more up and down swings … it affects confidence levels, I'd say. I think that's really reflective of the decision to pull."
Such swings have affected other deals. Both CHC Student Housing Corp. and Halifax's DHX Media recently cancelled their own equity offerings – though these two deals weren't IPOs.
Com Dev declined to comment on the decision, other than to say any additional details it decides to disclose will be provided in its third-quarter report.
Com Dev was one of the first companies to commercialize satellite tracking of maritime ships using a technology called automatic identification system, or AIS. The company tested the technology over several years and then created exactEarth in 2009.
ExactEarth offers clients a subscription service to access its exactAIS service, which provides a continuous data feed and distributes AIS messages received from ships around the world. According to the IPO prospectus, government customers made up approximately 20 per cent of exacEarth's customers and they comprise more than 70 per cent of the total AIS market value in 2014.
As it grew, the company brought on a minority shareholder, Spanish communications satellites company Hispasat S.A., which controls 27 per cent of the company. For the six months ended May 1, 2015, exactEarth reported a loss of $1.8-million on revenue of $11.4-million. In the same period last year, it lost $1.4-million on $7.7-million on revenue.