The TSX is shown on a business news ticker in the Financial District in Toronto on March 9, 2020. Softchoice Corp. has become the latest in a slew of Canadian companies to file for an initial public offering in recent months.Cole Burston/The Canadian Press
Softchoice Corp. has become the latest in a slew of Canadian companies to file for an initial public offering in recent months, despite increasing volatility in the market, particularly for technology stocks.
The information technology services company, which sells software made by giants such as Microsoft , Google and Cisco to corporate customers and manages it for its clients, was a public company until 2013, when it was taken private by Birch Hill Equity Partners.
As The Globe and Mail reported last week, the offering is led by TD Securities and Goldman Sachs , with additional underwriting support from RBC Dominion Securities, National Bank Financial, CIBC World Markets, Scotia Capital, BMO Nesbitt Burns, Cormark Securities, Laurentian Bank Securities, ATB Capital Market, Raymond James and INFOR Financial.
IPO market reopens ‘with a vengeance’ as 15-plus Canadian companies look to go public
The company is targeting a $350-million offering, sources told The Globe last week. The preliminary prospectus doesn’t disclose the target amount, the share price range or how much Birch Hill plans to sell. That information should be filed with regulators later this month.
Softchoice has 1,850 employees in 26 markets in the United States and Canada, serving 8,700 customers. Its operating earnings improved to US$65-million last year from US$43-million in 2017, although its net sales declined in that time, to US$837-million from US$875-million and from US$954-million in 2019. Net sales in the quarter ended March 31 were up 7.5 per cent year-over-year, to US$233-million. The company earned a net profit of US$2.1-million last year and US$1.8-million in 2019.
Softchoice also last year launched a business transformation plan it expects will improve operating earnings by more than $25-million annually next year.
In a letter to shareholders, chief executive officer Vincent De Palma said Softchoice aims to capitalize on the accelerated digital transformation by many organizations brought on by the pandemic, including expected increase in demand for cloud-based and collaborative digital workplace information technology. “Looking ahead, we believe that the prevailing trends impacting our customers and the fragmentation in our market continue to present a tremendous opportunity for Softchoice,” he wrote.
Softchoice is one of 15 companies advancing toward potential IPOs, The Globe reported last week, although continued market volatility could delay listing plans by some. Technology names such as Q4 Inc. dominate the list, although others looking to test public markets include retailers Neighbourly Pharmacy Inc. and Pet Valu Canada, and dental clinic operator Dentalcorp Holdings Inc.
Canadian technology IPOs have arrived since last summer at a pace unseen for 20-plus years. But they faced mixed investor reaction; while some, such as Nuvei Corp. , Magnet Forensics Inc. and Thinkific Labs Inc. have performed well after their debuts, others have traded down, including BBTV Holdings and MindBeacon Holdings Inc.
Meanwhile, several new issues struggled to get off the ground after the market began to wobble in late winter. Several, including MDA Ltd. , Boat Rocker Media Inc. and ABC Technologies Holdings , all had to cut their offering sizes and prices to complete their IPOs.
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