Software and Technology Monthly Newsletter - October 2024
In This Edition:
September 2024 In Review
Disrupt or be Acquired: Will Wealthsimple sell to Big Banks?
Public Market Dashboard - September 2024
Mergers and Acquisitions
September 2024 in Review
September 6 According to real estate firm CBRE, tech employment in Calgary increased by 78 per cent between 2018 and 2023, with the growth rate topping all tech hubs across Canada and the U.S.
September 9 PayPal (NASDAQ:PYPL) announces agreement with Shopify (TSX:SHOP) for the former to process the latter’s transactions.
September 10 The European Union’s Court of Justice ruled against Apple (required to pay €13B in back taxes) and Google (€2.42B for anti-competitive practices) as part of its efforts to rein in Big Tech dominance.
September 25 Lightspeed Commerce (TSX:LSPD),a leading point-of-sale and ecommerce software provider confirms it is exploring a strategic review of its business and operations, including a sale.
Disrupt or be Acquired: Will Wealthsimple sell to Big Banks?
Toronto based fintech firm Wealthsimple hit its first decade of operations in September 2024. The fintech platform that offers no-commission trading, payment options, mortgage, cryptocurrency, tax filing and robo-advisory investing services has made significant progress since its inception ten years ago and achieved profitability in Q2 2023. This leads us to the same old question in the Canadian banking industry: when will one of the big Canadian banks acquire Wealthsimple?
Fair value of Wealthsimple subsidiary as per parent company, Power Corporation of Canada’s Q2 2024 earnings report, up from $1.1B at the end of 2023. Note Wealthsimple raised $750MM in May 2021 at a $5B valuation then.
Big Banks Pursuing FinTech Acquisitions
It is undeniable that the Canadian banking industry has been oligopolistic for decades, dominated by the Big Five banks – RBC, TD, Scotiabank, BMO and CIBC. In addition to consolidation of regional banks, the Big Banks have demonstrated a track record of pursuing FinTech transactions in the past. Some examples include:
Financing
Below we summarized a few tech financing transactions announced in September:
Public Market Dashboard Year-to-Date to September 2024
1. The WST Index consists of 39 publicly traded Canadian software and technology companies tracked by Whitehorn to represent the Canadian software and technology sector.
Mergers and Acquisitions
Sep 3 – Markham based Dolphin Realty acquires Toronto based Homebaba Technologies. Acquisition of 49 per cent stake in Canadian online platform for new homes and condos to bolster digital expansion.
Sep 4 – French company EvoVadis acquires Toronto based Ulula. Acquisition of human rights technology and analytics company to enhance working conditions across global supply chains.
Sep 5 – Calgary based Network Innovations acquires Calgary based Infosat Communications. Acquisition of subsidiary of Telesat that specializes in remote satellite services to expand market presence.
Sep 6 – Wellfield Technologies (TSXV:WFLD) acquires New York based Tradewind Markets. Acquisition of digital gold marketplace platform provider leveraging blockchain technology to provide digital ownership and trading solutions as part of reverse takeover.
Sep 10 – San Francisco based Mercury acquires Vancouver based Teal. Acquisition of accounting tech startup offering tools to help vertical SaaS companies launch accounting platforms by fintech company to strengthen offerings.
Sep 12 – Edinburgh based Quorum Cyber acquires Oakville based Difenda. Acquisition of full-stack Microsoft Security managed services company to strengthen security services and to expand geographically.
Sep 12 – Toronto based KORT Payments acquires Surrey based Barnet Technologies. Acquisition of point-of-sale systems provider tailored to the licensed liquor sector including supplier and inventory management to enhance offerings to North American customer base and to accelerate payment offerings.
Sep 13 – Nextech3D.AI (CSE:NTAR) acquires UAE company Designhubz. All-stock acquisition of advanced virtual try-on technology to expand augmented reality offerings in the e-commerce space.
Sep 17 – Tampa based Advantive acquires Toronto based Comsense. Acquisition of ERP software provider for architectural opening distributors to expand into the architectural openings space and to elevate position in construction-related materials distribution.
Sep 17 – Toronto based Volaris Group acquires Wayne, PA based HUSK. Acquisition of corporate wellness provider offering tele-nutrition, tele-mental health, tele-physical therapy, wellness rewards, and fitness services by subsidiary of Constellation Software.
Sep 17 – Ottawa based Harris Computer acquires Sherbrooke, QC based SE2 operating as Alice POS. Acquisition of point-of-sale systems provider offering cloud software designed for the retail sector.
Sep 18 – Montreal based Dulcedo Group acquires Markham based Node App. Acquisition of AI-powered influencer marketing platform by talent management agency to bring marketing technology in-house.
Sep 18 – Descartes Systems Group (TSX:DSG) acquires Atlanta based Assure Assist operating as MyCarrierPortal. Acquisition of carrier onboarding and risk monitoring solutions provider to the trucking industry to improve Know-Your-Carrier capabilities and supply chain offerings.
Sep 18 – Powerfleet (NASDAQ:AIOT) acquires Toronto based Fleet Complete. $200MM acquisition of SaaS solutions provider specializing in connected vehicle technology and fleet management with over 2.6MM subscribers to expand AIoT offerings.
Sep 24 – Montreal based Behaviour Interactive acquires Vancouver based Red Hook Studios. Acquisition of game developer studio to expand offerings.
Sep 24 – BTQ Technologies (OTCQX:BTQQF) acquires Pasadena, CA based Radical Semiconductor. Acquisition of the technology assets of hardware security innovator specializing in cryptographic accelerators to strengthen cryptographic capabilities.
Sep 26 – Propel Holdings (TSX:PRL) acquires UK based Stagemount operating as QuidMarket. US$71MM cash acquisition of fintech platform provider specializing in credit for underserved customers to expand globally.
