Magnet Forensics founder Jad Saliba.Carlos Osorio/Carlos Osorio
Magnet Forensics Inc., a Waterloo, Ont., cybersecurity company stacked with former BlackBerry Ltd. executives, has upsized its planned initial public offering in the face of strong investor demand and is set to start trading Wednesday. It will be the first new company from one of Canada’s top innovation hubs to go public in 15 years.
Earlier this month Magnet filed to go public in a $90-million offering on the Toronto Stock Exchange, outlining plans to sell shares at between $14 and $16 apiece.
But after receiving more than $1-billion in prospective orders from investors, the company boosted the offering size to $100-million and increased the issue price to $17, three sources familiar with the transaction told the Globe Tuesday afternoon. The company confirmed the details in a press release later that night. BMO Nesbitt Burns Inc. and Canaccord Genuity Corp. are the lead underwriters, with CIBC World Markets Inc., National Bank Financial Inc., RBC Dominion Securities Inc. and Scotia Capital Inc. rounding out the underwriting syndicate.
The Globe and Mail is not disclosing the identities of the sources as they are not authorized to speak on the matter.
The Globe and Mail is not disclosing the identities of the sources as they are not authorized to speak on the matter.
The deal would follow this week’s successful $160-million IPO by Vancouver online course platform provider Thinkific Labs Inc., which also faced strong demand during its deal marketing period, bringing in nearly $1-billion in orders.
Two back-to-back successful Canadian tech offerings could bring a second wind to what, since fall, has been the busiest period for Canadian tech IPOs since the dot-com bubble. The market wobbled earlier this spring amid market choppiness as underwriters were forced to cut offering sizes and issue prices on IPOs by MDA Ltd., Boat Rocker Media Inc. and ABC Technologies Holdings. Meanwhile, Saskatoon’s Vendasta Technologies Inc. still has not updated the market on its plans after struggling to raise money for an intended $100-million IPO.
Founded in 2009, Magnet sells software to law-enforcement agencies and companies that are at risk of cybercrime. Its software has also been used for investigations into human trafficking and child sexual exploitation. The company was founded by Jad Saliba, a former Waterloo police officer, and Adam Belsher, a former BlackBerry executive. Former BlackBerry co-CEO Jim Balsillie is chairman of Magnet.
Magnet is one of the few highly profitable technology companies to go public. It earned US$11-million in net income last year, or 21 per cent of its US$51-million in revenue, compared with a US$1-million profit on revenues of US$39-million a year earlier. Its earnings before interest, taxes, depreciation and amortization (EBITDA) was US$15-million in 2020, compared with US$3-million in 2019. The company’s average recurring revenue per account has grown significantly, to US$9,400 per account in 2020 from US$5,100 in 2018 as it has expanded its offerings to the corporate world. The company has said it will use the capital to expand its customer base, develop more products, and to fund acquisitions.
Mr. Saliba, Magnet’s chief technology officer, is the only member of the C-suite that did not work at BlackBerry. Chief financial officer Angelo Loberto, chief revenue officer Craig McLennan, and chief strategy officer Scott Williams all worked at the former smartphone maker. Only five of the company’s 16 executives do not have previous BlackBerry experience. Magnet had 270 employees at the end of 2020.
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