In June of this year, supply chain planning technology provider Kinaxis announced a public offering of its stock. This IPO garnered little visibility in the U.S. because news of the IPO offering was restricted to Canada and the Canadian equity community. Supply Chain Matters readers were made aware of both the pending IPO and in a Friday news round-up, completion of the initial offering.
According to a Kinaxis press release published in June, the IPO consisted of 5 million common shares with an aggregate of 2.7 common shares being sold by certain selling shareholders at a price of Cdn$13.00 per share. The initial public offering and secondary offering was priced at Cdn $15 per common share and resulted in aggregate gross proceeds of Cdn$65.0 million to Kinaxis and Cdn$35.6 million to the selling shareholders, for total aggregate gross proceeds of Cdn$100.6 million.
At the time, Canadian business media reports identified the selling shareholders as Boston based HarbourVest Partners and Alberta Trust of Montreal, both of which retained a 30 percent ownership stake. Kinaxis CEO Doug Colbeth further indicated to media that proceeds from the IPO were to be utilized to pay down $30 million in debt and strengthen the company’s balance sheet. He did not rule out acquisition of other companies if that made sense for Kinaxis’s business.
Supply Chain Matters reviewed statements prepared for the initial IPO. They indicated that the supply chain planning provider had total revenues of Cdn $38 million in 2011, $46.6 million in 2012, and $60.8 million in 2013. Kinaxis reported a net loss of Cdn $9.7 million in 2013. In the first quarter of 2014, the company reported revenues of Cdn $15.6 million and a net income of Cdn $2 million.
This week provides additional, somewhat unexpected news of another secondary offering. Kinaxis announced that selling shareholders HarbourVest International Private Equity Partners III- Direct Fund L.P. and TechnoCap I, L.P. completed the sale of an aggregate 2.5 million of Kinaxis common shares at a price of Cdn $18.35 per common share with gross proceeds of Cdn $45.8 million. According to the press release, Kinaxis did not receive proceeds from this offering.
Following the closing of the Offering, TechnoCap now holds 3.2 million common shares representing approximately 13.7% of the issued and outstanding common shares of the Company, and HarbourVest holds a little over 2 million common shares representing approximately 8.7% of the issued and outstanding common shares of the Company. Individual executives from HarborVest and TechnoCap are current members of the Board of Directors of Kinaxis.
Technology providers often get involved in private equity relationships to fund growth and innovation. Private equity invests for a return. These relationships bring their own set of dynamics.