Canadian payment firm Nuvei makes history with most valuable tech IPO ever on TSX

Shares in payment processing firm Nuvei Corp. started trading on the Toronto Stock Exchange on Thursday, raising $700 million in the biggest initial public offering of a technology company in the history of the TSX.

Founded in Montreal, Nuvei is a payment processing firm with almost 800 employees and about 50,000 customers who in the year up until the end of June processed more than $35 billion worth of transactions over the company's network. A large portion of its customers are in the fast-growing world of sports betting.

Earlier this month the company announced it planned to sell 26 million shares on the TSX, priced between $20 and $22 apiece. But strong demand for the shares allowed the company to price its shares even higher on Wednesday, at $26 each.

That values the offering at more than $700 million US, enough to make the company the biggest initial public offering (or IPO) of a tech company in dollar terms in the history of the TSX — more than BlackBerry and Shopify's IPOs were worth at the time.

When trading in the shares opened for institutional investors on the TSX Thursday, they jumped to roughly $45 a share, according to Bloomberg data.

Shopify recently became the most valuable company in Canada, passing Royal Bank. At last count, Shopify was worth $136 billion, but when it went public in 2015, the company only raised about $130 million in its IPO.

BlackBerry, then known as Research in Motion, raised $100 million in its 1997 IPO. Eight years later, RIM was the most valuable company in Canada, worth about $67 billion at its peak.

Nuvei was valued at $2 billion last December when it raised $270 million US from private investors, including Quebec's pension plan, the Caisse de dépôt et placement du Québec.

The company, which reports earnings in U.S. dollars, made $245 million US worth of revenue last year but lost $69.5 million US after expenses were deducted, according to regulatory filings.

Nuvei's IPO comes as buzz around investing in the tech sector is high because several companies in the industry have proved resilient and experienced an uptick in business amid the COVID-19 pandemic.

Shares in Netflix, Amazon, Google, Facebook, Apple and other tech names have made huge gains during the pandemic, as millions of people stuck at home has created huge demand for online services.

Companies such as Nuvei are eager to get to market to tap into investor demand for tech shares.

According to analyst Stephanie Price with CIBC, 23 technology companies have gone public between June and August, raising $9.4 billion US in the process. On Wednesday, U.S. market watchers were agog as software firm Snowflake went public in an IPO, and promptly saw its stock price double on its first day of trading.

Almost 95 per cent of all North American IPOs this summer have been tech companies, with more to come. 

"The rebound in technology names is a good sign for the private tech companies with plans to publicly list their shares in the coming weeks," Price said in a note to clients.

As of the end of August, there were 211 technology companies listed on both TSX and TSX Venture Exchange, worth a combined $289 billion.