B. C. fi rms poised to lead IPO rebound

HootSuite, Vision Critical among tech companies to go public in next two years

TORONTO — Social media and online- education start- ups are poised to lead a resurgence in technology initial public offerings in Canada as investors burned by a slump in the commodity industry turn to more lucrative markets.

Vancouver’s HootSuite Media Inc. and Vision Critical Communications Inc. as well as Ontario’s Desire2Learn Inc. are among technology companies that will be ready to go public within two years, according to John Ruffolo, who has invested in all three through the venture capital arm of the Ontario Municipal Employees Retirement System pension fund. Canaccord Genuity Group Inc. forecasts that more than $ 400 million will be raised through technology IPOs in Canada this year, the most for the industry in more than a decade, according to data compiled by Bloomberg.

Canadian investors are turning to technology for growth after three straight years of declines for mining and materials companies, which along with energy account for more than a third of the stocks on the nation’s benchmark equity gauge. Meanwhile, technology companies in the country rose 36 per cent in 2013, the biggest gain in four years and returning more than comparable U. S. firms. Entrepreneurs are choosing to stay in the country instead of moving to the U. S. because of the increasing availability of pre- IPO funding, said Ruffolo, chief executive officer of OMERS Ventures.

HootSuite, Desire2Learn and Vision Critical “certainly are big enough and the markets are ready enough,” said Tom Astle, head of strategy at Toronto investment firm Difference Capital. “The market still seems to be fairly open. They’re quite hungry for growth products versus commodity- resourcetype products.”

Astle estimates the three companies are among Canadian firms that could raise at least $ 50 million each in IPOs.

Last year’s 31 per cent decline in the Standard & Poor’s TSX Composite Materials Index, which measures 51 Canadian stocks, is giving investors a reason to shift their money to technology companies. The TSX index for Canadian information technology companies rose 36 per cent in 2013, fuelled by Constellation Software and Open Text. The index’s climb compared with a 26- per- cent gain for the S& P 500 Technology Index of 65 U. S. companies.