The increase in shares in Copperleaf Technologies gave the company, led by chief executive officer Judi Hess, a market value of $1.78-billion, making it one of the few female-led tech companies in Canada to achieve a 10-figure valuation.Rafal Gerszak/The Globe and Mail
Copperleaf Technologies Inc. has joined the swelling ranks of British Columbia technology companies valued at $1-billion after soaring in its debut on the Toronto Stock Exchange Thursday.
Shares in the Vancouver decision analytics software maker closed at $22.88, up more than 50 per cent from the issue price of $15, set Wednesday. That gave the company, led by chief executive officer Judi Hess, a market value of $1.78-billion, making it one of the few female-led tech companies in Canada to achieve a 10-figure valuation.
The company raised gross proceeds of $140-million from the offering – the first tech IPO on the TSX since July – following strong demand from investors. Copperleaf drew $1.4-billion in pre-issue orders, a source familiar with the deal said. That was more than 10 times the company’s original offering size of $125-million, which was increased on Wednesday. The Globe and Mail is not identifying the source as they are not authorized to discuss the matter.
Copperleaf files to go public, ending summer break for Canadian tech IPOs
The offering price was well above the $11- to $13-per-share range set out by the company last month. Close to 70 per cent of the offering went to U.S. investors. Social Capital, the Silicon Valley investment firm founded by billionaire Chamath Palihapitiya, was the lead investor, with a $38-million order.
The IPO makes Copperleaf at least the 13th B.C. company in the past year to achieve a valuation of $1-billion. Other Vancouver-area companies to reach that level via an IPO include antibody developer AbCellera Biologics Inc., online course platform provider Thinkific Labs Inc. and Telus Corp. spinoff Telus International (Cda) Inc.
Agriculture technology provider SemiosBio Technologies Inc., enterprise software makers Themis Solutions Inc. (known as Clio), Visier Inc. and Trulioo Information Services Inc., as well as cybersecurity firm GeoComply Solutions Inc., digital collectibles pioneer Dapper Labs Inc., green building products maker Nexii Building Solutions Inc. and Victoria bitcoin miner Blockstream Corp. all surpassed that valuation through private capital financings this year. And risk and compliance software maker Galvanize Inc. was bought by New York-based Diligent Corp. for US$1-billion.
Copperleaf kicked off the fall’s IPO season on the TSX last month and has been closely watched as a bellwether of sustained investor interest in new Canadian tech issues after a throng of deals in the sector earlier in the COVID-19 pandemic. Fifteen tech companies went public on the TSX in the 12 months ended July 31. That compares to 12 that went public on Canada’s senior exchange in the 11 years ended Dec. 31, 2019.
Close on Copperleaf’s heels is Toronto investor relations software provider Q4 Inc., which has resumed its march to an IPO after delaying its public listing process in June. Online learning provider D2L Corp. of Kitchener, Ont., is set to launch its long-awaited IPO this month. Other tech companies proceeding with IPOs on the TSX include subprime lender Propel Holdings Inc. and advertising exchange provider Sharethrough Inc.
Copperleaf sells optimization software powered by artificial intelligence to large companies with extensive physical assets, such as utilities and transportation infrastructure giants, which use the product to analyze, plan and budget how to spend their capital budgets over multiyear periods.
The company’s revenue in the first six months of 2021 was $30.7-million, up 78 per cent from the first half of 2020. Revenue for all of 2020 was $44.5-million, and $36.9-million in 2019. Copperleaf has 62 clients, up from 39 at the end of 2019. In its prospectus, the company said it had never lost a customer. It was profitable in 2018 but has since dipped into the red as it increased spending to fuel growth and shift its business model to selling its software by subscription.
Copperleaf’s IPO is a win for Vancouver’s Pender Growth Fund Inc., an early backer, which controls 10.1 per cent of the stock. Pender said in a release Thursday that at the $15 issue price, the net asset value of its fund portfolios that hold Copperleaf shares had jumped by 39 per cent, to $16.99 a share.
Pender managing partner Maria Pacella said in an interview her initial investment “was really a bet on Judi.” Ms. Hess joined the company in 2009 after serving as president of Creo Inc. and vice-president with Eastman Kodak after the photo giant bought the Vancouver software pioneer for US$1-billion in 2005.
“I knew she could scale a business, but this was a different type of business,” Ms. Pacella said. “It took a lot of perseverance to get to the point where they had scale and an international customer base.” Ms. Hess recruited several Creo alumni to fill Copperleaf’s top ranks.
“The great reception by the markets today is a signal of how great management teams should be rewarded and the belief of the opportunity ahead for Copperleaf,” Ms. Pacella added.
The IPO was co-led by Merrill Lynch, BMO Capital Markets and William Blair & Co. Other underwriters in the syndicate included CIBC Capital Markets, RBC Capital Markets, Canaccord Genuity and Cormark Securities.
Editor’s note: The percentage change between Copperleaf's issue price and its closing price has been corrected in the online version of this story.
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Sean Silcoff