Welcome to the official newsletter of CIBC’s Tech & Innovation Capital Markets group
A curated monthly report to keep our readers abreast on relevant and recent developments within the Canadian tech ecosystem.
Special Announcement – Colin Ryan
CIBC is pleased to announce that Colin Ryan has joined our Global Investment Banking team as Managing Director & Co-Head, Technology & Innovation.
Based in Toronto and working closely with Kathy Butler, Managing Director and Head of Capital Markets (BC) and Co-Head of Technology & Innovation Investment Banking, Colin will be responsible for providing capital markets advisory and underwriting services to corporate clients operating within the technology and innovation sectors. Colin began his career with CIBC and brings more than 20 years of investment banking experience with both Canadian and global banks. Welcome Colin!
2021 Year in Review
We continue to see tremendous growth across our Technology & Innovation platform, and are pleased to showcase our transactions from 2021- a year characterized by unprecedented M&A and financing activity. Read more of our top highlights in the the attached report.
Canadian technology sector performance and valuation
| EV / NTM revenue multiples 1 | LTM sector price performance 1 |
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Source: FactSet and Pitchbook; as at December 31, 2021; in C$ unless otherwise noted.
1Please refer to the end of the document for technology group constituents.
Canadian Venture Capital market update 2
2 4 deals with no announced value are omitted from deal value.
3 9 deals with no announced value are omitted from deal value.
Noteworthy Canadian deals
| Company | Size | Sub-sector | Lead investors |
|---|---|---|---|
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US$70M | Healthcare Technology Systems |
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US$62M | Software |  |
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US$50M | Software |  |
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US$48M | IT Services |  |
T&I @ CIBC
Deal announcement – CIBC Global Investment Banking
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Dye & Durham Ltd. – $500 million Acquisition of TELUS Financial Solutions Dye & Durham Ltd. is a leading provider of cloud-based software and technology solutions designed to improve efficiency and increase productivity for legal and business professionals. CIBC Capital Markets acted as financial advisor to Dye & Durham Ltd. |
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Traction Guest – Acquisition by PSG Vancouver based Traction Guest was acquired by ShieldCo, a PSG portfolio company providing solutions to manage visitors, employees, workspaces and beyond through its visitor management software solutions. Traction Guest enables enterprises to provide safe and secure work environments by managing the complete lifecycle of people entering and exiting the workplace and was recently named 5th on the Deloitte Technology Fast 50™ Canada list. |
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ResortSuite – $25 million Acquisition by Agilysys Inc. ResortSuite was acquired by Agilysys Inc., a leading provider of next generation SaaS software solutions for the hospitality sector. ResortSuite is a Canada-based fully integrated property management solution provider focused on the complex multi-amenity and resort market. The transaction was closed for approximately $25 million USD. CIBC Capital Markets acted as exclusive financial advisor to ResortSuite. |
Deal announcement – CIBC Innovation Banking
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TealBook – Debt Financing TealBook is a leading supplier data foundation that uses AI to autonomously enrich supplier data across millions of global suppliers. TealBook raised $50 million in Series B funding led by Ten Coves Capital with debt financing provided by our CIBC Innovation Banking team. |
Podcasts
Adopting the Startup Mentality with Vena Solutions COO Tina Goulbourne
Accelerating Startup Growth with Terminus CEO Tim Kopp
Technology & Innovation in‘sites’ with CIBC Equity Research
T&I ‘Bits & Bytes’
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U.S iGaming Set to Rise with Nuvei Positioned to Run with It With online sports betting and gambling legal in ~21 U.S. states, the U.S. iGaming industry appears positioned for significant growth. Indeed, Graphical Research and Mordor Intelligence expect the industry to reach $20 billion by 2026, representing a ~17% CAGR. This will be further aided by the potential of large states, like Texas, California, and Florida coming online too. iGaming bettors value the ability to deposit and withdraw their winnings quickly, safely, and through multiple payment methods. A 2020 survey indicated that 75% of players cited quick payouts as one of the most important factors when deciding to open an account with an online sportsbook. Nuvei appears best poised to provide expedient service in an continually evolving and segmented regulatory environment. |
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Top 5 Most Read Blogs In 2021 – Our Five Most Popular Blogs We highlight our five most popular blogs of 2021, and recommend investors re-acquaint themselves with them as they provide valuable context for events of the past year. We’re grateful for the value they have provided to investors, with readership growing rapidly. We thank our readers for their interest and warm wishes for 2022. |
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Targeting Big Tech – Europe Continues to Lead Tech Regulations Efforts Another European Union member took a significant step recently towards regulating big tech, with Italian antitrust authorities fining Amazon 1.13-billion euros. The fine was levied after Italian authorities ruled that Amazon had negatively impacted competition by favoring third-party sellers that used its own logistics service, Fulfillment by Amazon (FBA). Big tech continues to be a target of European regulation, and the fine comes on the heels of another 746-million euro fine levied on Amazon by Luxembourg’s privacy regulator for general data protection regulation (GDPR) violations in July. The willingness to regulate big tech from authorities outside of Europe remains in earlier stages, but with government and public sentiment shifting in favour of increased regulation, we would not be surprised if the wave of regulatory activity spreads beyond European borders. |
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Board Ranking 2021 – Technology Scores Improving Somewhat but Rankings Decline The Globe & Mail released its 2021 Board of Directors ranking, a detailed look at the composition, compensation, rights, and disclosures for the boards of S&P/TSX composite constituents. The tech industry did not score well in the rankings, with the sector’s boards ranked as the second worst in the survey. With the exception of LifeWorks (classified under Industrials), the scores were largely weak across the board. There was no one criterion that skewed the technology industry average, with the sector ranking below TSX averages on most metrics. We believe that the weak scores could be in part due to inadequate disclosures, with the Globe compiling the rankings based on disclosures included in the companies’ most recent proxy circulars. The average score by tech sector did show some improvement Y/Y, up from an average tech sector score of 64.5 to 68.4. We believe that ESG rankings will become increasingly important and expect the technology sector to enhance board and other ESG disclosures over time. |
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2022 Equity Outlook – Mundane Returns In a Low Interest Rate Environment Almost two years into the pandemic, we continue to believe equities are the superior asset class in an overall low-return environment. From an operational standpoint, earnings across both the S&P 500 and the S&P/TSX have shown a remarkable resilience in weathering previously unimaginable headwinds over the last two years. Stretched equity valuations are supported by unusually low interest rates. We have proudly released our fourth edition of our CIBC Equity Outlook. This year’s outlook also incorporates a Sustainability and Technical Analysis overview to complement our fundamental insights. |
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The New Unicorns – Rise of Mega-cap Private Cos. Drives Increase in Decacorns If 2020 was the year of the unicorn, 2021 is poised to be remembered as the year of the decacorn. Decacorns, private companies with a minimum valuation of US$10 billion, have doubled in 2021 amid a plethora of funding options for late-stage companies and a strong tech valuation environment. Decacorns are not new, with Meta (formerly Facebook) emerging as the first private tech company valued at over $10 billion in 2007. Historically, decacorns have seen post-IPO valuations rise, helping to explain the increased competition to fund the highest-valued private companies. |
Stay informed. Request access to CIBC Capital Markets Research Central here.
Recent technology news
“As 2021 breaks records, can the Canadian tech sector sustain its growth in 2022?”
Before 2021, 2019 had the highest Canadian venture capital (VC) investment on record, with a total of $6.2 billion CAD. Canadian tech firms were able to raise $11.8 billion during Q3 2021 alone. Despite the challenges we face in 2022, with the pandemic unabating and a diminishing labor force, outlook remains optimistic for the Canadian tech sector.
Read the full article at BetaKit.
“Theranos and the Logic of Start-Up Bets”
Elizabeth Holmes, the founder and former CEO of blood-testing company Theranos, was found guilty on four charges of defrauding investors. For each charge, Holmes will face up to 20 years in prison. Author Shira Ovide explains how much Holmes was a product of the “fake it until you make it” start-up culture of Silicon Valley and what makes this case uniquely criminal.
Read the full article at the New York Times.
“What 7 combined decades in tech taught us about perseverance and reinvention”
A recent survey found that nearly half of women in tech are outnumbered 4-to-1 or greater by men. From two leading women in tech, they provide guidance on the skills that helped them succeed in a still male-dominated industry.
Tech & Innovation Key Contacts
Canadian Technology Constituents
High-Growth Canadian SaaS – Ceridian, Descartes, Dialogue, Docebo, Kinaxis, Lightspeed, Magnet Forensics, Q4, Shopify, Thinkific
Large Cap Canadian Tech – Altus, Blackberry, CGI, Constellation Software, Converge Technologies, Dye and Durham, E Inc., Enghouse, Evertz Technologies, Nuvei, OpenText, Real Matters, Softchoice
Mid Cap Canadian Tech – Absolute Software, Calian, Celestica, Computer Modelling Group, Farmers Edge, Sierra Wireless, TECSYS, WeCommerce
Small Cap Canadian Tech – Alithya, Baylin Tech, BBTV, Blackline Safety, Kneat, MindBeacon, Optiva, Pivotree, Quarterhill, Sangoma, Sylogist, Terago, Vecima, Vitalhub
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