Toronto-based startup Payfare closed its initial public offering on the Toronto Stock Exchange (TSX) Friday, pulling in $65.4 million CAD.
The total gross proceeds hit the target Payfare had for the initial public offering (IPO) after it was re-priced from $60 million last week. Payfare, which offers FinTech software for gig economy workers and employers, filed for its IPO in February. The company is now trading on the TSX under the symbol ‘PAY.’
“We are well positioned to lead the industry, while providing value to our shareholders as a public company.”
– Marco Margiotta, Payfare
Payfare’s IPO consisted of 10,900,000 Class A common shares priced at $6 per share. As of Monday morning, Payfare’s shares were down slightly to $5.84.
The Toronto FinTech startup was founded in 2015 and offers mobile banking, instant payment, and loyalty-reward solutions for gig economy workers in North America. The startup’s software is used by several companies considered to be titans of the gig economy, including Uber, Lyft, DoorDash, and DiDi.
The startup noted its decision to go public was to strengthen its available capital resources and create a public market to assist Payfare in executing its growth. Specifically, the startup previously stated its intention to use approximately $21 million of the proceeds to repay its short-term debt obligations. The remainder will be put towards Payfare’s growth including potential future acquisitions. Payfare’s plans to expand its offering to new segments, having expressed interest in sectors such as trucking, e-commerce for small to medium-sized businesses, and social media influencers.
“Gig workers are a valued and growing part of our economy, and Payfare is proud to help drive their financial security and inclusion,” said Marco Margiotta, CEO of Payfare. “We deliver on this by partnering with leading on-demand gig platforms to power free digital banking and instant payouts to their workforce. With our proprietary technology, and continued platform and revenue growth, we are well positioned to lead the industry, while providing value to our shareholders as a public company.”
Payfare said in its initial prospectus that it expects the gig economy to grow, noting the COVID-19 pandemic has demonstrated its “essential nature.” A 2019 study from Mastercard indicates the size of gig economy transactions is projected to grow at a 17.4 percent compound annual growth rate by 2023.
The IPO was made through a syndicate of underwriters led by Stifel GMP. The group also included Scotia Capital, Canaccord Genuity and Raymond James. Payfare has granted the underwriters an over-allotment option (exercisable for 30 days following closing) to purchase up to an additional 1,635,000 common shares at the offering price, which the company says would bring in additional gross proceeds of up to $9.8 million if exercised in full.
Payfare going public is part of a continuing trend in the Canadian tech scene that has seen both seasoned and later-stage companies like Nuvei turning to the public markets as well as earlier-stage startups like MindBeacon, General Assembly Pizza, and Dialogue. Saskatoon-based Vendasta also recently filed to go public and The Globe and Mail has also reported that Magnet Forensics and Thinkific both recently confidentially filed documents with regulators to do so.
Image source Unsplash. Photo by Kai Pilger.