US investors’ “Midas Touch” in Canadian IPO performance

On March 8, 2019, Lightspeed POS Inc. completed its much-anticipated initial public offering (IPO), raising $240 million through the issuance of 15 million subordinate voting shares at $16 per share. Its stock opened on the Toronto Stock Exchange (TSX) at $18.10, traded as high as $20.22, briefly fell down to $18.57, then recovered at $18.90 at closing, which represents a gain of 18% for the first day’s trading.

Lightspeed POS IPO is similar to that of one of VC backed IPOs in 2017 in the ways of pre-IPO publicity and funding announcements. First-day trading does not matter much and we will closely watch its future performance. To gain insights to the performance of VC/PE back IPOs, CPE Media Analytics has compiled and analyzed all the VC/PE backed IPOs on TSX since 2016, from financings.ca database.

There were 18 IPOs, including Lightspeed POS, listed on the TSX or dual-listed on either NYSE or NASDAQ.

The following are the results of our study, which are not flattering to the Canadian VC and PE investors.

  • VC backed IPOs generally perform worse to PE backed IPOs: 28.8% vs 33.3%. If we were to remove Cannimed, a cannabis company that was acquired by Auroa Cannabis, the overall performance of VC backed IPOs dropped to -22.7%.
  • Canadian VC/PE backed IPOs overwhelmingly underperform against US VC/PE backed IPOs: -4.3% vs 55.9%.
  • Dual-listed IPOs outperform sole TSX-listing IPOs: 154.4% vs -0.5%.

The full report can be downloaded from financings.ca/reports

Methodology
The aggregate of closing price over that of IPO price is used as the performance indicator.
Canadian IPOs listed solely on US Exchange are not included.

About CPE Media Analytics
CPE Media Inc., through financings.ca, is Canada’s comprehensive data provider on venture capital and private equity.

CPE Media Analytics

Powered by Canada's industry-leading financing database, FINANCINGS.CA, CPE Media Analytics is Canada's only data provider tracking both private and public financings.

We are Canada’s only data provider that specifically tracks and provides metrics on venture capital investments by investor type, by source of funding, and fundraising activities.

We provide trusted, unbiased (without undue industry influence), and verified private and public market news and intelligence to all industry stakeholders