Only One Tech IPO in Canada Last Quarter, First Since 2011

September 6, 2013

While Canada’s tech sector only had one initial public offering last quarter, that could actually be a positive sign, according to a new report from financial firm PwC.

The IPO, which raised almost $55 million for Halogen Software, a maker of cloud-based employee management software, was the first major IPO in Canada’s tech industry since 2011.

“Because of recent lacklustre returns, Canadian investors are looking for alternatives to their traditional natural resources sector for investments. With its strong performance over the last couple of years, the technology sector is a natural option,” said Chris Dulny, technology industry leader for PwC Canada.

“There’s reason to believe that it will be the first of a steady stream—good news for emerging technology entrepreneurs in Canada who, according to a recent PwC survey, don’t see IPO as a viable exit for their companies,” said Dulny.

Worldwide, tech companies raised over US$2.8 billion through IPOs in the second quarter of 2013. While that’s an 84 per cent drop when compared with the same period last year, Facebook’s massive IPO skews the numbers, according to the report. When Facebook is excluded, there appears to be a 59 per cent increase in the amount of funds raised by tech companies through IPOs.

Software and internet software and services were the strongest category for tech IPOs, making up 70 per cent of deal volume. And that trend shows no sign of slowing down.

“Demand for new software tools that enable cloud, social, mobile and data analytics can be expected to remain robust for the foreseeable future,” Raman Chitkara, a PwCpartner and global technology industry leader wrote in the report.

Of the 16 tech IPOs worldwide, 12 of them were in the United States. Luxembourg, Switzerland, India and Canada had one each. Interestingly, the largest American IPO issue was by EVERTEC, based on the island territory of Puerto Rico.

Notably absent from the list is China, which had been the source of the majority of tech IPOs in previous years. There have been no Chinese tech IPOs since the end of 2012.