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Jason Smith, president and Ceo of Real Matters, is seen behind key performance indicators written on a glass panel at the company's Markham, Ont. headquarters on June 1 2016.Fred Lum/The Globe and Mail

Real Matters Inc. joined an exclusive club of publicly listed Canadian tech companies, becoming only the third such company since 2014 to raise more than $100-million in its initial public offering.

Unlike those other recent tech IPOs, Real Matters – which provides software tools to banks and lenders for real estate appraisals critical to the home-mortgage market – did not see the same kind of opening-day share price bump of either Kinaxis Inc. (up 14 per cent in its 2014 debut) or Shopify Inc. (up 51 per cent in its 2015 opener).

"I don't even know what it's trading at," Real Matters president and chief executive officer Jason Smith said on Thursday morning, after he "rang the bell" at the Toronto Stock Exchange to kick off the trading in his company's shares. (At the TSX, it's actually a large box that guests can depress to kick off the trading day.) About an hour after the interview, the share price fell below the $13 IPO price after opening at $15. The stock closed at $12.89.

"The way we thought about executing on this offering was looking for great long-term shareholders, that wanted to build the business versus driving short-term share price performance," Mr. Smith said.

"This is a marathon, not a sprint," says Carey Diamond, CEO of Whitecastle Investments Ltd., and a partner in long-time Real Matters investor Whitecap Venture Partners. "We don't look at things day by day or hour by hour; we're in it for the long run. This is a very high-growth story, that you can't judge from week to week or on the basis of one or two quarters."

Despite being deeply connected to the mortgage market, Mr. Smith says it's not bad timing to launch this IPO at the same time the stock market has been roiled by troubles at mortgage lender Home Capital Group Inc., as well as moves by different levels of government to take some of the air out of an over-inflated housing sector.

With Moody's downgrading Canada's major banks Thursday, Bank of America Merrill Lynch issued a note that called signs of a housing bubble "mixed" while warning that rates would need to rise to ease a tight credit market: "The risk of a financial crisis increases if rates remain low for too long, especially given consumers' high indebtedness," the report stated.

"One of the things I was always worried about was actually launching in the reverse: Say the quarter where Brexit happened [the summer of 2016,which saw rates on some U.S. mortgages fall to three-year lows]. People just went 'Wow it's great and it's always going to be up forever,'" Mr. Smith says. "There will be volatility with what rates do, and please only buy our stock if you're focused on that long-term objective."

Investors and market watchers have been hoping Real Matters would kick off what some view as a long-overdue season of IPOs for some of the country's high-value startups such as Hootsuite Media Inc. or Vision Critical Communications Inc.

"Investment bankers have been trying to bag one or more of the obvious names for months," says Mark McQueen, CEO of Wellington Financial and an investor in Real Matters. "Each company has its own reason – as you see south of the border with Airbnb – folks come when they are good and ready."

The IPO raised $156.7-million by selling more than 12 million shares at $13, of which Real Matters will keep $125-million and its selling shareholders will collect $31.6-million. That gives the company a valuation north of $1-billion.

"There hasn't been an IPO in a Toronto-based tech company in many years. [Today's deal] sends a strong signal that there's a lot of public capital available to provide growth capital," says Mr. Diamond, whose partner at Whitecap, Blaine Hobson, is the chairman of Real Matters.

Mr. Smith doesn't rule out a future cross-listing in the United States, perhaps after a significant acquisition, in order to bring in more capital and give the company more exposure in the U.S. Mr. Smith said he only spent about two days in the U.S. during the IPO roadshow.

The lead underwriters in the deal included BMO Nesbitt Burns Inc., Infor Financial Inc. and BofA Merrill Lynch, with participation from Scotia Capital Inc., TD Securities Inc., Wells Fargo Securities Canada, Ltd., Canaccord Genuity Corp., National Bank Financial Inc. and Raymond James Ltd.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 27/03/24 4:00pm EDT.

SymbolName% changeLast
REAL-T
Real Matters Inc
+3.17%6.19
KXS-T
Kinaxis Inc
+1.74%152.94
SHOP-T
Shopify Inc
+0.15%106.7
SHOP-N
Shopify Inc
+0.11%78.62

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