Terago the latest tech IPO success

Terago was priced on Monday night (sorry for the delay) at $11.75 (marketing range of $11.50 to $13.50) for a $50 million IPO, plus a greenshoe of $7.5 million. CIBC World Markets (Mario di Pietro) and Genuity (Sanjiv Samant) led the charge, which means this is the first time those two firms have worked together on an IPO (see earlier post “Tech IPO momentum building“, April 10-07). Valuation in the range of 5x trailing revenue. 20 institutions in the deal, all of which were Canadian-based.

With Ruggedcom and Espial both receiving valuations in the 3-4x revenue range, the market is paying for growth. But, with Espial quickly trading up to $8+ from the original $7 IPO price, it is clear that every last nickel is not being squeezed out of these deals.

Three tech IPOs have raised $115 million in just three weeks; perhaps the buyside now has the confidence to buy TSX deals, rather than wait for them to season on the wacky AIM market. Or maybe the idea of an unregulated stock market caused some PMs to think twice about their investing habits. Regardless, this is great news for the Canadian tech industry (and the TSX public affairs division).

While it must be said that the $6.5 million in underwriting fees will feed a few dealers, particularly after a long wait in the tech wilderness, Genuity must be credited for playing a co-led role in all three IPOs. The only independent dealer other than GMP to crack the top row on these successful transactions.

Interesting, as well, that no one in Tech land would go public on the AIM without involving Canaccord, but for these TSX deals the boards in question felt comfortable looking further afield.

Hopefully the excitement around these tech liquidity events (money-making for investors, as well) will trickle down to VC-land, and give institutional LPs (pension funds and Life Cos) some confidence to support the three large venture funds (Ventures West, edgestone and VenGrowth) currently in the market raising their next fund. It certainly should!

MRM