D2L sets price range on IPO that would value Waterloo-area online learning company at more than $1-billion

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D2L Corp. has set a price range of $19 to $21 a share for a proposed $200-million initial public offering, the online learning software provider disclosed in a securities filing Monday.

The filing comes five days after Kitchener, Ont.-based D2L filed to go public on the Toronto Stock Exchange, disclosing for the first time the proposed size of its offering. It’s the latest in a rash of Canadian tech companies and global online-learning platforms to join public markets this year. D2L’s IPO would be the second prominent TSX offering by a company from the technology-heavy Waterloo region after April’s listing by Magnet Forensics Inc.

D2L has benefited from a shift to digital learning during the pandemic and said in its prospectus it has experienced a 200-per-cent boost in new bookings in the early months of the global health crisis over 2019 levels.

The offering, which would value the company at more than $1-billion at the current price range, is being led by underwriters TD Securities and BMO Capital Markets; the rest of the investment banking syndicate includes RBC Dominion Securities, Canaccord Genuity, Raymond James, National Bank Financial and Eight Capital. The Globe and Mail first reported the company’s plans to go public in September.

D2L is looking to raise gross proceeds of $143.3-million from the offering of 9.5 million and 10.5 million subordinate voting shares; the balance of about $57-million would pay for shares from an employee trust to fund payment of income tax and other statutory deductions related to the distribution of subordinate voting shares to some employees, and to repay a company loan by D2L to a holding company affiliated with chief executive officer and founder John Baker.

According to the prospectus, the initial loan was intended to cover $16.6-million in outstanding income tax liabilities in connection with a 2012 share distribution that included three of Mr. Baker’s siblings, after a 2016 Canada Revenue Agency audit. It is also intended to help Mr. Baker’s siblings pay $3.6-million related to exercising D2L share options.

Mr. Baker owns or controls 100 per cent of the company’s 27.4 million multiple voting shares, which carry 10 votes apiece, compared with one each for the subordinate voting shares. If the offering is priced at the middle of the proposed price range, Mr. Baker will control 51.6 per cent of the company’s equity but have more than 90-per-cent voting power.

D2L said in the prospectus it generated US$138-million in revenue during the 12 months that ended July 31, up 21 per cent from the year prior. Its annual recurring revenue for the same period rose 23 per cent, to US$144-million. In D2L’s most recent fiscal year ended Jan. 31, the company reported revenue of US$126-million, up 15 per cent, while its loss grew more than sixfold, year-over-year, to US$41.7-million.

Mr. Baker, 44, founded the company in 1999 while a student at the University of Waterloo.

With a file from Josh O’Kane

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