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Halogen’s valuation shadow could undercut Canada’s tech IPO momentum

Halogen Software CEO Paul Loucks (front, centre) with company employees.

The deals are there for Canadian technology companies and its broader ecosystem, that’s for sure.

Kinaxis (KXS:TSX), Critical Control (CCZ:TSX), DIRTT (DRT:TSX) and Espial (ESP:TSX) have all raised equity via public offerings over the past few weeks. And that’s just a representative list of Canadian-based tech firms which have been able to get something done in what I’ll call a less-than-perfect capital markets environment. The NASDAQ hasn’t been playing ball — slowing the U.S. tech IPO market to a trickle. U.S. SaaS multiples have contracted (although they don’t look horrible from an issuer’s standpoint), and several previous local IPO offerings haven’t yet produced sustainable gains for their IPO investors.

Names that come to mind include Difference Capital (DCF:TSX), Halogen Software (HGN:TSX), NexJ (NXJ:TSX), ViXS (VXS:TSX) and so forth. And while there’s nothing unusual about shares not going straight up post-IPO, one name in particular is drawing undue attention. And it may have a negative impact on the TSX for some time to come.

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