DEALTALK-Canada IPO market luring action, tech cos

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* IPOs limited by fears of further turbulence

* Canadian companies look to both TSX and Nasdaq

By Pav Jordan

TORONTO, May 31 (BestGrowthStock) – More than a few Canadian
companies are ready to go public, though only a handful – some
gutsy tech start-ups with heavy backing — are likely to brave
the recent market turbulence and take the final step.

Over the past weeks, initial public stock offerings by
Canadian companies have not fared so well, raising less cash
than expected in some cases and dropping below their IPO price
soon after trading began in others.

Despite months of preparation, sponsors of some issues have
pulled or delayed them after prospective buyers proved
disinterested.

Even so, investors at last week’s annual Canadian Venture
Capital and Private Equity Association meeting in Ottawa were
upbeat about the health of the IPO market. Most of those
interviewed see activity picking up soon as confidence returns
from its nadir during the global financial crisis.

“I think we should expect to see a lot more (IPOs) through
the balance of the year, unless there’s some other major new
(market) event,” said Rick Nathan, managing director at
Kensington Capital Partners, a Toronto-based firm with some
C$500 million in capital under management.

The names bandied about at the CVCA meeting, the largest
annual industry gathering of its kind in Canada, were mostly in
technology fields.

At least three were on most everybody’s lips as key IPO
candidates: ViXs, a Toronto-based semiconductor company that
makes advanced video processing products; BelAir Networks, an
Ottawa-based wi-fi solutions company; and Smart Technologies, a
Calgary-based maker of electronic whiteboards backed by the
venture capital arm of Intel Corp (INTC.O: ).

Smart Technologies has been pegged as an IPO candidate for
the past year, and a story in Canada’s Globe and Mail said on
Friday an IPO could value the company at some C$2 billion, with
the founders keeping a third of the company.

At the conference last week, the head of one venture
capital firm said the IPO could raise some C$400 million.

ViXs is also seen as ready for IPO, with investors pointing
at major backing in Canada and the United States as evidence of
a worthy pedigree.

One investor with knowledge of the company and its managers
said ViXs would be more likely to look at a U.S. listing on the
Nasdaq due to the nature of its backers.

In Canada, ViXs has the backing of Celtic House Venture
Partners, one of the country’s most active investors in private
information and communications technology, with C$315 million
($297 million) in assets under management.

It also has the backing of NEA, a U.S.-based firm with $11
billion in assets under management and which in the past 30
years has invested in 165 companies that have gone public.

BelAir Networks is backed by Export Development Canada, a
self-financed crown corporation that helps finance Canadian
exporters, and by Panorama Capital, a Silicon Valley-based fund
with Canadian managers.

The company, which provides WLAN market services globally,
was founded in 2001 and has customers that include AT&T and
Cablevision.

On its website, it also says it is backed by investment
from Comcast Interactive Capital, T-Mobile Venture Fund and
leading venture capital firms including Trilogy Equity
Partners.

But what may stop any of these companies going forward with
an IPO is a market that’s still subject to turbulence, as the
recent European debt crisis proves.

Case in point is Porter Airlines, who’s bold plan to go
public in April appears to be fizzling, with institutional
investors less than excited about buying into the opportunity.

Institutions like pension fund managers are vital to any
IPO deal because they normally account for purchase of about 75
percent of the issue.

The Globe and Mail reported Friday that Porter Aviation
Holdings Inc was chopping the stock price on its C$120 million
public offering, to about C$5.50 a share from between C$6 and
C$7 a share. The newspaper cited “an industry official familiar
with the IPO” as its source.

“Right now a lot of these IPOs are on hold because of the
Europe fiasco,” said Rob Chaplinsky, a U.S.-based technology
investor and the managing director of Bridgescale Partners, a
Silicon Valley-based investor in technology companies.

So far this year initial public offerings in Canada have
raised some C$2.84 billion, including over-allotments, compared
with C$1.97 billion in all of 2009 and some C$700 million in
2008, according to Thomson Reuters data [nN31185542].

Stock Market Basics

(Reporting by Pav Jordan, Editing by Frank McGurty)
(For more M&A news and our DealZone blog, go to
http://www.reuters.com/deals)

DEALTALK-Canada IPO market luring action, tech cos