Why Dax Dasilva thinks about taking Lightspeed private

Dax Dasilva publicly pondered the idea of taking Lightspeed private this week, saying  “makes you think.” 

Dasilva’s comments are a sign of the times. Over the last few months, BetaKit has tracked a spate of public tech companies announcing private buyouts: Q4 Inc. delisting from the TSX in February in its go-private deal; American PE firms purchasing TrueContext and mdf commerce, while Figure 1 sold to a medical news and education platform. 

Will Lightspeed be next? “Dax’s views that the company is always open to go-private discussions isn’t so surprising in light of several other recent transactions, but we still think it’s the status quo for the time being,” Scotiabank analyst Kevin Krishnaratne told BetaKit. 

Still, more than 35 Canadian tech companies IPO’d from 2020 to 2021, and the majority of these are trading below their IPO share price, according to Laura Lenz, partner at OMERS Ventures. “This under-market trading performance (sometimes up to 60%) causes the board and management to consider a strategic review process – alternatives that could include a strategic acquisition or a going private transaction,” she said. 

Part of the reason smaller-cap tech businesses are either going private or considering it has to do with the high interest rate environment (more on that in last week’s newsletter) and mega-cap firms “sucking the air out of the room,” said ATB Capital Markets analyst Martin Toner. 

Lenz said she expects more startups to follow suit over the next couple of quarters. Meanwhile, as tech companies remain relatively cheap and “unloved by public market investors” for now, it’s an opportunity for PE firms to leverage, Toner said. 

‘Til next week, 
Bianca Bharti
Newsletter Editor

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In response, WonderFi has alleged that one of the firms behind these claims is “engaged in an attempt to gain control of WonderFi without paying a premium to shareholders.”

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Feature image courtesy Elevate.