MID-YEAR ROUND UP: Canada’s Most Influential IPOs To Date in 2014
Canadian investors don’t always get a shot at the hottest IPO’s, but certainly not for lack of trying. CIBC Managing Director Tyler Swan recently told the Financial Post “Investors here are as hungry for technology IPOs and new stories as they are anywhere else in the world.” Fortunately, this year has already brought Canadians opportunities to own or benefit from profitable stocks with more on the way in the coming months.
Founded in 2002 and headquartered in Calgary, Encana is Canada’s largest natural gas producer. The North American energy company also transports and markets natural gas liquids and has a U.S. based subsidiary with 2.6 million acres of land.
During the recent IPO of its PrairieSky Ltd. royalty business, Encana sold 52 million shares at $28 a share, raising $1.46 billion and making it Canada’s largest IPO in fourteen years. PrairieSky Ltd. is designed to collect royalties and fees from other energy companies operating on its land and distributes a large amount to its shareholders.
Encana’s CEO is Doug Suttles, who formerly held leadership positions at Exxon and BP. Amid falling gas prices, Suttles is dedicated to increasing the company’s profit through the sale of assets and zeroing in on properties that produce higher-value oil and gas.
Founded in 1999 and headquartered in Hangzhou, Alibaba began as a business-to-business portal between Chinese manufacturers and overseas buyers. Executive chairman and former English teacher Jack Ma led a team of eighteen to develop their group of e-commerce sites to eventually become responsible for over 60 percent of the parcels delivered in China.
Alibaba’s companies include the Taobao marketplace - an online shopping source that boasts hundreds of millions of products and service listings - and Tmall.com, the largest brands and retail platform in China. Alibaba also has its own third party, fee-free payment system called Alipay that empowers consumers to determine their satisfaction level with products before releasing funds to the seller.
The upcoming IPO, projected to become available in August, is expected to raise as much as $40 billion, making it the largest IPO in the United States to date as well as the biggest tech company IPO worldwide. In its prospectus, Alibaba speculated as to how the IPO might affect its current employees. Alibaba executives and external speakers have been commissioned to proactively discuss successful management strategies for newfound wealth as well as personal development and business goals with their employees.
The Canadian Pension Fund, managing the retirement savings of 18 million people, made a $100 million direct investment in Alibaba in 2011. That investment is expected to yield enormous rewards. Additionally, the Pension Fund reportedly made a $465 million commitment to a fund run by a U.S. private-equity firm that also owns a small share of Alibaba. With current shareholders in China, investors in Canada, and the potential for new shareholders in the United States, the IPO is bound to reap financial benefits internationally.
Financial service provider Markit Ltd., one of the United Kingdom’s fastest growing financial firms, was founded in 2003 and offers over 3,000 institutional customers pricing and reference data, indices and valuation services. Canadian Lance Uggla started the company in London and continues to serve as its CEO.
Their IPO, filed this month, is expected to be valued at $25 to $27 per share. With 4.57 million common shares available, the IPO could value the company at $4.47 billion. Current shareholders include Goldman Sachs, JPMorgan Chase, Deutsche Bank and Bank of America.
As with Alibaba, the Canadian Pension Fund intends to invest $450 million in Markit in order to take a 10 percent stake in the company. This would enable the Pension Fund to appoint a director to Markit’s board as well as expand its range of investments.
Callidus Capital Corporation
Toronto-based Callidus Capital was established in 2003 and is a privately held company specializing in alternative financing solutions for companies that cannot obtain adequate financing from traditional lending institutions. Callidus bases its credit criteria on the value of a company’s assets, enterprise value and borrowing needs. COO David M. Reese has been with the company, which prides itself on its deep understanding of the realities of business, since 2011.
During its April IPO, Callidus raised $252 million from the sale of 18 million shares at $14 each. The company initially hoped to raise $175 million from selling a 35 percent stake with shares priced between $12 and $14. The successful IPO proved to be 44 percent more profitable than projected. The shares closed at $16.25 and have traded in the $16 to $17.15 range.
Montreal’s Lumenpulse is a specialized lighting company that formed in 2006. Lumenpulse has provided lighting solutions for more than 5,000 projects and transformed building standards through the use of energy efficient materials. The company also has regional headquarters in the United States, United Kingdom, and Singapore.
In its April IPO, the company priced 6.25 million shares at $16 each for proceeds of $100 million. Strong demand allowed the underwriters to exercise the over allotment option. The IPO raised $115 million and the stock closed at $18.35 per share. Since going public, the shares have traded in the $18 to $20.50 range.
Lumenpulse chief financial officer Robert Comeau commented on the IPO to Financial Times by saying, “This indicates that there is demand for a company like us that has shown solid growth in the past and wants to continue growing.” With such a profitable IPO, Lumenpulse seems poised for further success.