Canadian technology companies have been making multiple trips to the equity market to capitalize on a rally in tech shares that’s helping them raise cash at ever-higher valuations.

Dye & Durham Ltd., which makes software used by law firms, took advantage of a more than sixfold rally in its shares since its July IPO to raise $500 million (US$394 million) in a bought deal of stock and convertible debentures, the company said Tuesday.

Toronto-based Dye & Durham, which went public at $7.50 a share last July, received $50.50 per share in the private placement. It also issued shares in September, November and December last year. Peers including Lightspeed POS Inc. and Docebo Inc. have made similar moves to hit the market.

Canada’s S&P/TSX Information Technology Index has risen 82 per cent in the past year, as of Tuesday’s close, fueled by rallies in Lightspeed and Shopify Inc. That compares with a 36 per cent advance for the U.S. S&P 500 Information Technology Index.

Dye & Durham fell 5.9 per cent to $46.12 at 1:48 p.m. Wednesday in Toronto, bringing its decline to more than 12 per cent since announcing the new issue.

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Shares of technology companies have gained since the onset of the pandemic as their corporate customers turned to cloud-based applications to support their remote workforces, said Anurag Rana, an analyst at Bloomberg Intelligence. The technology sector was one of the few places investors could look for growth during the crisis, with huge swaths of the economy including retailers, restaurants, airlines, hotels and casinos hammered by lockdowns, he said.

“Issuers and private-equity investors are not stupid, and they know somewhere down the road that valuations may come back,” Rana said. “So this is the time when they sell.”

Those gains are giving early investors in tech companies an opportunity to take some profits. In conjunction with Dye & Durham’s private deal announced Tuesday, some investors agreed with the underwriters to sell 1.98 million shares at the $50.50 price as well.

Return Trip

Lightspeed, which provides cloud-based point-of-sale systems for retailers and restaurants, has also seized the moment. The company went public in Canada in February 2019 and last year followed that up with a U.S. IPO, selling shares for US$30.50 apiece. The deal raised US$332.3 million for the company and US$65.4 million for some shareholders.

After Lightspeed’s share price more than doubled, it went back to the market again last week with a public offering of shares for US$70 each, raising US$620.2 million for the company and US$56 million for other shareholders, including Chief Executive Officer Dax Dasilva.

Docebo, which sells cloud-based learning software, has tapped the market multiple times over the past year. The firm, which went public in Canada in October 2019, completed a bought deal of shares at $50 apiece in August.

The move raised $25 million for the company and $50 million for investors including founder and Chief Executive Officer Claudio Erba, Chief Revenue Officer Alessio Artuffo and top outside investor Intercap Equity Inc.

The firm then conducted a U.S. IPO in December, selling shares for US$48 each, raising US$165.6 million for the company. Less than two months later, the company completed a secondary public offering of shares for US$49.67 each. That deal raised US$115 million for the sellers.

Other companies whose shares have had big run-ups have yet to the tap the market a second time. Nuvei Corp., which runs a payment technology platform, hasn’t sold shares since going public last September in the largest Canadian tech IPO announced in 2020. In that offering, the company and investors sold shares for US$26 apiece, raising US$730 million for the company and US$75 million for the investors.

The shares, which trade on the Toronto Stock Exchange but are priced in U.S. dollars, have more than doubled from the IPO price and are now trading at about US$60. Representatives of Nuvei didn’t immediately return email messages seeking comment.

“As long as the tech rally stays and valuations don’t go back down, it wouldn’t surprise me if you see more issuances, secondaries or IPOs,” Bloomberg Intelligence’s Rana said.