On one hand, continued lacklustre returns in the mining and metals sector should have opened up the door for Canadian tech stocks. A sector rotation, however, may have been nipped in the bud by the sheer lack of tech listings. This short list was made shorter this year by a longer trend in M&A activity that saw companies like Lorex Technology and 20-20 Technologies acquired by larger, mostly U.S.-based concerns.
By the end of the year, however, we saw a distinct reversal of this trend, with Canadian companies such as DHX Media, Amaya Gaming, Patheon, and Macdonald Dettwiler boldly acquiring assets abroad. Two more such companies appear on this short list.
For two reasons, we believe we have seen the last of the depressed environment for Canadian listed techs. First, a solid argument could be made that the Canadian tech sector has never been healthier. The Kitchener-Waterloo region alone is now home to more than 850 tech firms that employ nearly 30,000 people. Similar stories are happening in Ottawa, Vancouver, and in seemingly less likely spots such as Edmonton and Calgary.
The second reason is a story that may have not received as much print as it should have in 2012; it’s the remarkable emergence of the TSX and TSX Venture Exchanges as world class players. Our hometown exchanges now rank third in the world for capital raised in 2012, ahead of London, Hong Kong, China, and Australia. What’s more, the activity has been distributed across sectors, with mining accounting for just 19% of new issuers.
Speaking of those exchanges, we’re very grateful to have the 2012 Cantech Letter Awards sponsored by the Toronto Stock Exchange and TSX Venture Exchange. Cantech Letter, the award winners, and many of the analysts who will vote on the awards will open the trading day on Friday, January 11, 2013, with an official Market Open Ceremony. We’d also like to thank sponsor Heenan Blaikie, who will be joining us for the presentation.
So let’s hear who you think should be the 2012 Cantech Letter TSX Tech Stock of the Year. The three finalists nominated by our judges are listed below. You can vote in the poll at the bottom of this page.
Here are your choices, listed in alphabetical order:
In Canada these days, the tech IPO is a rare bird. Perhaps, however, the notable success of Avigilon will help lure some of our many exceptional private techs to the public markets. Avigilon IPO’d last November at $4.50 and quick began dispelling any notion that its success as a private company would continue under the microscope of public ownership. The company has continue to deliver high double-digit growth on the way to what management believes will be a half-billion dollar company by 2016.
Founded in 2004, Avigilon designs and sells next-generation surveillance systems. Management says the surveillance market is fragmented because to date there has been no integrated supplier of equipment, meaning the majority of end users do not have high definition systems due to compatibility issues and a lack of industry standards. Avigilon allows clients operating mission critical environments such as prisons and casinos to have install a high def system that is reliable as analog, and has the added benefit of providing video resolution that is standing up in courtrooms, which reduces legal costs. Avigilon has sold over 210,000 camera and software licenses that have been installed at more than 12,000 customer sites.
This article is brought to you by the Information Technology Group at Heenan Blaikie, delivering strategic legal advice and innovative business solutions to technology-based companies. For more information click here.
CGI Group (TSX:GIB.A)
In 2012, CGI Group turned the most predominant recent trend in Canadian tech on its ear. Canuck tech observers used to watching assets leave our country got a dose of the opposite effect when CGI acquired Logica, a company larger than itself, in a bold move completed this past summer. Cantor Fitzgerald analyst Tom Liston says he likes CGI’s acquisition of Logica because it allows the Montreal-based company to offer its customers true global presence.
CGI Group was founded in Montreal in 1976. The Company’s name is an acronym for Consultants to Government and Industry. Midway through 2010, CGI picked up Stanley, an Arlington, Virginia based systems integrator for a billion dollars. But the company was just getting started; the August 20th pickup of Logica was the largest acquisition in its history. CGI Group now ranks as the sixth largest independent information technology and business process services firm in the world.
It wasn’t quite on the scale of Logica, but Redknee shook up the market earlier this month when the company announced it had acquired the Business Support Systems division of Nokia Siemens Network for approximately $54-million. M Partners analysts Ron Shuttleworth, who called the acquisition “transformational”, says that by successfully integrating the entity, which has more than three times the revenue of Redknee itself, Redknee could triple its earnings. The Mississauga-based company, he notes, gained a total of 130 customers in ninety countries, including 35 tier-one carriers.
Founded in the solarium of Lucas Skoczkowski’s apartment in 1999, Redknee now boasts clients such as Microsoft and Cisco. The company’s billing solutions run the gamut from the customer side to helping service providers better monitor, understand and monetize their subscriber base. Redknee’s real-time converged billing solution has been benchmarked to support a quarter of a billion subscribers.