Thank you for your support through 2021, we hope you and your loved ones are enjoying a restful holiday season. Canadian software firm Dye & Durham Ltd. soared as much as 21% after reaching a deal to buy Australian data services firm Link Administration Holdings Ltd. for about $3.2 billion. Sophic Client, GameSquare Esports (GSQ-CSE, GMSQ-OTC), a stock we recently called out as a tax loss buying candidate, had a nice move (gaining ~35%) last week, as the Company’s execs were profiled in Business Insider. As tax loss selling comes to an end, our full report can be found on our website here. China Mobile, the wireless carrier that was among the state-owned firms forced to delist from the U.S. by the Trump administration for alleged ties to the Chinese military, is seeking to raise the equivalent of US$7.6 billion in a Shanghai initial public offering. It would be the biggest domestic IPO in a decade, according to Bloomberg. The Securities and Exchange Commission announced Tuesday that electric vehicle maker Nikola will pay US$125 million to settle charges that it misled investors about its products. Subscription-based streaming video services worldwide spent nearly US$50 billion on content in 2021, an uptick of 20% from last year, according to new data released by research firm Ampere Analysis. Venture capital invested a record US$30 billion in crypto in 2021, more than quadruple previous high, this comes as Apple, among other tech companies is quickly losing talent to lucrative crypto startups. Semi CapEx to hit US$152 billion in 2021 as market on track for US$2 trillion by 2035. TSMC, the world’s largest foundry, intended to spend between US$25 billion and US$35 billion on new manufacturing capacities as demand for its services is setting records.
Canadian Technology Capital Markets & Company News
Dye & Durham (DND-TSX) soars after trumping Carlyle on Australia data deal.
Canadian software firm Dye & Durham Ltd. soared as much as 21% after reaching a deal to to buy Australian data services firm Link Administration Holdings Ltd. for about C$3.2 billion ($2.5 billion). The cash offer represents a premium of about 15% over Tuesday’s closing price for Link, the Toronto-based company said in a statement. As part of the deal, Dye & Durham will also indirectly acquire Link Group’s 43% ownership in the recently spun-out conveyancing business PEXA Group Ltd. https://bloom.bg/3H680Z6
Hubly raises $1.7 million to help financial services firms improve their productivity.
Vancouver-based startup Hubly has secured $1.7 million in seed financing to fuel the growth of its software solution for financial advisors. Hubly’s product helps financial advisors and their teams build custom workflows, collaborate, and automate repetitive tasks. The startup’s seed round was co-led by Mucker Capital and OCA Ventures. Including the new financing, Hubly has raised $2.2 million in funding to date. Since launching its product a year and a half ago, Hubly claims to have seen significant demand from financial services firms looking to digitize and improve their operations amid the shift to remote and hybrid work environments. https://bit.ly/3eEf2IJ
Traction Guest acquired by US growth equity firm PSG.
Vancouver-based Traction Guest has been acquired by PSG, a growth equity firm based in Boston, Massachusetts that focuses on growth-stage software companies. Traction Guest offers cloud-based visitor management systems (VMS) that enable enterprises to leverage visitor data, shape their brand experience, and enhance security measures. Founded in 2017, Traction on Demand is a cloud consulting and application development partner with Salesforce. In addition to Traction Guest, it has also launched other SaaS product companies such as bettr.me, Traction Rec, Traction Hierarchies, and Traction Complete. Prior to the PSG deal, Traction Guest’s total funding raised was a $17 million Series A round announced in 2019, led by Silicon Valley-based Bessemer Venture Partners, with participation from Salesforce Ventures and other private investors. https://bit.ly/32BoZnq
Sophic Client GameSquare Esports (GSQ-CSE, GMSQ-OTC, Sophic Client): GameSquare, a Sophic client we recently called out as a tax loss buying candidate, had a nice move (gaining ~35%) last week, as the Company’s execs were profiled in Business Insider: Meet the top 31 execs defining the future of advertising in video games and esports.
GameSquare has a portfolio of esports organizations, talent agencies, and marketing firms that help athletes, celebrities, and brands extend their reach into the gaming world. Kenna became CEO in January 2021 after having previously served as CFO for FaZe Clan, one of the world’s most valuable esports organizations. Since then, he’s accelerated GameSquare’s growth by acquiring companies like Complexity Gaming, a long-running esports organization that was backed by the Dallas Cowboys owner Jerry Jones. These acquisitions help GameSquare satisfy advertisers’ needs around marketing, talent management, and organizing events. For example, its subsidiary, esports media agency Gaming Community Network, co-launched a new esports division with Roc Nation Sports. Through this partnership, Roc Nation’s athletes will compete in tournaments, create gaming content, and participate in live streams that will be distributed across GCN’s dozens of websites. Complexity also provides sponsorship opportunities for brands. As head of sales, Grushkin is key to these efforts. Though she has only been at the company since October 2021, she has plenty of experience, having worked at Twitch for six years, most recently as senior director of client strategy. One of her biggest highlights at Twitch was helping develop Old Spice’s “Nature Adventure” campaign in 2016, where viewers controlled a real-life person for three days while he’s stuck in the woods. https://bit.ly/32CtwWJ
Global Markets: IPOs, Venture Capital, M&A
Cybersecurity Saas company ZeroFox to go public via merger with SPAC in deal valued at about US$1.4 billion.
ZeroFox Inc., a cybersecurity software-as-a-service company, said Monday it is going public via a merger with special-purpose acquisition corporation L&F Acquisition Corp. in a deal with an expected equity value of about US$1.4 billion. As part of the deal, ZeroFox will acquire IDX, a digital privacy protection and data breach response service company. The new company will be renamed ZeorFox Holldings Inc. and is expected to trade under the ticker “ZFOX.” ZeroFox was founded in 2013 to address the security challenges created by a “digital everything” world, said James C. Foster, chairman and CEO. “This rapid digital transformation has made companies vulnerable to attackers, resulting in the highest breach rate the industry has ever seen,” he said. The new company will have more than US$250 million of cash from the SPAC, as well as US$170 million in financing. The deal is expec ted to close in the first half of 2022. https://on.mktw.net/3HaWYSt
Cybersecurity startup Snyk is said to plan 2022 IPO.
Cybersecurity startup Snyk Ltd. is making preparations for an initial public offering that could happen as early as next year, according to people familiar with the matter. The Boston-based company is speaking to banks and aiming for listing as soon as mid-2022, said the people, who asked not to be identified because the matter is private. https://bloom.bg/3EpScP9
Via files confidentially to go public.
On-demand shuttle service and software company Via has confidentially filed to go public, the company said in a statement. The company has not yet determined how many shares will be offered or what the price range for the proposed offering will look like, as is typical for this sort of release. Via follows Reddit in filing privately for a public listing before the end-of-year market freeze. Both companies should debut in early 2022. Why file now given the impending holiday period? Via has posted impressive results in recent quarters, so getting its ducks in a row – shuttles in a line? – for an early-early IPO is far from aggressive. It’s reasonable, frankly, given that tech valuations are still strong despite recent declines. And companies that can go public may want to take advantage of the IPO window while it’s open. Per Crunchbase, Via has raised US$777.1 million in known funding to date, from investors including Macquarie Capital, Mori Building, Shell, 83North, Broadscale Group, Ervington Investments, Hearst Ventures, Planven Ventures, Pitango and RiverPark Ventures. Last month Via announced a US$130 million round that pushed the on-demand shuttle and software company to a US$3.3 billion valuation. https://tcrn.ch/3JlIAZM
Data management startup Cohesity files confidentially for IPO.
Cohesity, a SoftBank-backed data management startup led by a former Google engineer, announced it has filed confidentially for an initial public offering, although it hasn’t yet determined how many shares it will offer or a price range. The filing reflects the growing business prospects for software providers that help organizations manage and analyze the mountains of data they generate in the course of their operations. More recently, Cohesity—and its main startup rival, Rubrik—have played up their cybersecurity features as a way to combat ransomware attacks. https://bit.ly/3svrVN5
Snapdeal files for IPO.
Snapdeal filed for an initial public offering on Tuesday, joining a number of firms in India that have tapped the public market this year. The New Delhi-based startup, which counts SoftBank among its backers, said in its draft prospectus that it will issue fresh shares worth US$165 million. Some of its existing investors including SoftBank, Sequoia Capital India and Foxconn plan to sell as many as 30.7 million secondary shares in the IPO. The 11-year-old firm, which once competed with Amazon and Flipkart in India, has lost considerable market share in recent years and shifted focus to serve consumers in smaller cities and towns. Snapdeal, which has raised over US$1.7 billion to date (according to Crunchbase and Tracxn) says more than 50 million unique customers have shopped at least once on its platform since April 2018. More than half a dozen consumer-focused Indian startups have filed for an IPO this year. While some including Zomato and Nykaa have made stellar debuts, others including Paytm, which filed for the nation’s largest IPO, has consistently performed below its issue share price. Insurance aggregator PolicyBazaar has also lost all its IPO gains. https://tcrn.ch/3JgEJNm
Booted from the U.S., China Mobile seeks to raise $7.6 billion in Shanghai IPO.
China Mobile, the wireless carrier that was among the state-owned firms forced to delist from the U.S. by the Trump administration for alleged ties to the Chinese military, is seeking to raise the equivalent of US$7.6 billion in a Shanghai initial public offering. It would be the biggest domestic IPO in a decade, according to Bloomberg, and serves as a major test for China’s stock market as more Chinese firms seek alternatives to listing in the U.S. amid tightening U.S. and Chinese regulatory scrutiny. Chinese firms are increasingly turning to domestic markets and Hong Kong as places to raise capital as the path to a U.S. listing grows increasingly difficult. https://bit.ly/3myvDBN
Tencent reduces stake in JD.com.
Tencent will no longer be the top shareholder in JD.com, the Chinese online retailer, after it distributes US$16.4 billion-worth of its stake to shareholders as a dividend. After the dividend, Tencent’s stake in JD.com will be 2.3% from around 17%, Reuters said. That will leave Walmart as the top outside shareholder in China’s second-biggest e-commerce company. Tecent’s president, Martin Lau, will step down as director of JD.com, Tencent said in a statement. The surprising announcement comes as Chinese regulators pressure the big tech platforms who have been accused of monopolistic behavior in using their size to steer business towards companies in their closed ecosystems and away from rival businesses. https://bit.ly/3yVV7ya
Venture capital invested a record US$30 billion in crypto in 2021, more than quadruple previous high.
Venture capital funds poured a record US$30 billion — more than every other year combined — into crypto investments in 2021, Bloomberg reported. The report, which cited PitchBook data, said the sky-high number is nearly four-times the 2018 record of about US$8 billion, in part thanks to investors funding “anything and everything” in crypto. Much of that fundraising — about US$7.2 billion — came from US venture capital, according to the report. Crypto, an industry that’s just over a decade old, has gained traction this year. Bitcoin and ether, the top two cryptocurrencies by market capitalization, reached record highs in 2021. The market for NFTs, digital art tied to the blockchain, is set to hit a record US$17.7 billion by the end of the year, according to research from Cointelegraph. And the metaverse has been gaining steam since Facebook’s parent company rebranded to Meta, as a sign of its push into the next phase of the internet. https://bit.ly/3syOctm
Oracle to acquire Cerner in deal valued at US$28.3 billion, confirming earlier report.
Oracle Corp. said Monday it has agreed to acquire electronic-medical-records company Cerner Corp. for US$95 a share, in a deal valued at US$28.3 billion. The news was reported earlier by the Wall Street Journal. “Working together, Cerner and Oracle have the capacity to transform healthcare delivery by providing medical professionals with better information–enabling them to make better treatment decisions resulting in better patient outcomes,” said Larry Ellison, chairman and chief technology officer at Oracle. The deal is expected to boost Oracle’s adjusted earnings in the first fiscal year after closing, said CEO Safra Catz. It’s expected to “contribute substantially more” to earnings in the second fiscal year and after that. The deal is expected to close in 2022. Cerner shares were halted for the news but had gained 1% premarket. Oracle shares fell 2.6%. https://on.mktw.net/3qqyyhe
Electric vehicle stocks fall with Biden’s ‘build back better’ plan in jeopardy.
Shares of electric vehicle companies fell Monday after U.S. Sen. Joe Manchin announced his opposition to President Joe Biden’s “Build Back Better” plan, which provides tax credits for consumers who purchase electric vehicles. Manchin’s opposition almost certainly dooms the current version of the bill. Among the worst hit stocks Monday included electric vehicle makers Lordstown Motors, Rivian and Nikola, which respectively fell 8.2%, 7.9% and 7.3% from the close of the market Friday. The share price of Rivian, which had its initial public offering last month, is now only 15% above its IPO price of US$78, a drop from when the stock was trading at 121% its IPO price. Biden’s signature legislation—which would provide expanded child tax credits and incentives to mitigate the effects of climate change—includes a tax credit of up to US$12,500 for those who buy an American-made electric vehicle. Manchin, a Democrat from West Virginia who is one of the party’s most conservative senators, holds a crucial vote in an evenly split Senate. Tech stocks in general continued to slide Monday in the wake of Manchin’s announcement and worries about rising Covid-19 cases as the Omicron variant continues to spread. Both the S&P 500 and the Nasdaq fell 1.1% Monday, the third straight day that the indexes fell. https://bit.ly/3prMDvF
Nikola to pay SEC US$125 million to settle charges of misleading investors.
The Securities and Exchange Commission announced Tuesday that electric vehicle maker Nikola will pay US$125 million to settle charges that it misled investors about its products. Nikola’s settlement comes five months after the SEC filed charges against Milton for going on a “public relations campaign aimed at inflating and maintaining Nikola’s stock price,” according to the commission’s press release. The US$125 million settlement is part of an order from the SEC that also stipulates that Nikola cease and desist from further violations of the charged provisions. The allegations surfaced after an investment firm alleged Nikola—which went public via a merger with a special purpose acquisition company in June 2020—defrauded investors about its technology. The resulting controversy led to the resignation of Trevor Milton, Nikola’s former CEO. One claim alleged that the company produced a video appearing to show one of its trucks in action when instead it was simply rolling down an incline. In the settlement, Nikola did not admit nor deny wrongdoing, but will continue to cooperate with the SEC’s ongoing litigation and investigation, according to the commission’s press release. In its own press release, Nikola said it was “pleased to bring this chapter to a close” and will pay the settlement out over two years. https://bit.ly/3mA5YZx
Amazon Web Services marks third web outage this month.
Amazon Web Services (AWS) said it fully restored power to a data center in the Eastern U.S. at 9:13 a.m. ET after a power outage at about 8 a.m. on Wednesday, but some service outages are still taking place. Datacenterdynamics.com reported service problems at several major AWS customers at its US-East-1 (Virginia) cloud region including Coinbase, Fortnite, Hulu, Instacart, Rocket League, Acadly, Peloton, Hinge, Quora, the Epic Games Store, Slack, GitHub rival Bitbucket, Samsung Smart Lights, Asana, and Imgur. In its most recent update at 9:13, AWS said some customers continue to see some impact from the outage as it works toward full recovery. The website Downdetector.com reported a peak of 1,451 reported outages of web services at 8:29 a.m. ET and 854 outages as of 9:37 a.m. The power outage marks the third this month for AWS. https://on.mktw.net/3yW7muq
Media, Streaming, Gaming & Sports Betting
Subscription streaming video content spending approaches US$50 billion in 2021.
Subscription-based streaming video services worldwide spent nearly US$50 billion on content in 2021, an uptick of 20% from last year, according to new data released by research firm Ampere Analysis. When compared to content spending figures in 2019—before streaming usage saw a boom as a result of people stuck at home during the early stages of the pandemic—subscription streaming services’ expenditures are up 50% in 2021, the firm said. The news comes hardly as a surprise as major entertainment giants increasingly prioritize spending money on films and TV shows to fuel their streaming services. Earlier this fall, Disney disclosed that it would spend US$33 billion overall on content during its fiscal 2022, up from US$25 billion during its fiscal 2021. The increase is being driven by streaming as Disney aims to populate Disney+ and Hulu with more original films and TV shows—a pipeline which has been clogged for more than a year due to factors including internal organizational shakeups and pandemic-related production delays and, as The Information previously reported. Netflix remains the stop streaming spender, according to Ampere Analysis, accounting for 30% of total subscription streaming spending. While Disney has fully committed to going toe-to-toe with Netflix, the question remains whether newer rivals such as HBO Max, Peacock and Paramount+ can close the gap—or, in some cases, if they are even willing to. https://bit.ly/3ptQCb3
Thousands of Chinese influencers are rushing to settle their back taxes as the country’s top live streamer was forced to pay US$210 million in tax fines.
Influencers in China are rushing to pay back taxes amid a government crackdown that has taken down the country’s top live streamer. According to the state-owned China News Service (CNS), more than 1,000 live streamers have stepped forward to pay back taxes following the government’s September announcement that it would strengthen its regulation of state revenue collection from the entertainment sector. Taxpayers have until the end of 2021 to rectify their taxes arrears to avoid heavy penalties, according to CNS. Beijing is intensifying oversight of the entertainment industry and regulating what celebrities can do. China’s internet regulator said in November that celebrities in China must avoid flaunting their wealth and adhere to “core socialist values.” In November, China also revealed a blacklist which included the names of 88 celebrities it had cited for “illegal and unethical” behavior. https://bit.ly/3prbCz7
Fintech, Blockchain & Cryptocurrency
Apple among tech companies quickly losing talent to lucrative crypto startups.
Many of the tech giants are taking their time considering whether or not to support cryptocurrencies amid a huge wave of investment and interest in the space. Now a new report from the New York Times looks at how executives and engineers are leaving companies like Apple, Amazon, Google, and Meta for crypto startups. Last month, we heard Tim Cook share in an interview that he personally owns bitcoin and/or Ethereum while reiterating that Apple is “looking at” it but that the company does not have immediate plans to implement support for cryptocurrencies. But while companies like Apple, Amazon, and more take time deliberating if or how to jump in, fast-moving startups in the crypto space are attracting executives and engineers from the tech giants. When Sandy Carter left her job as a vice president of Amazon’s cloud computing unit this month, she announced in a LinkedIn post that she was joining a crypto technology company. She included a link for open positions at the start-up. Within two days, she said, more than 350 people — many from the biggest internet companies — had clicked the link to apply for jobs at the firm, Unstoppable Domains. The start-up sells website addresses that sit on the blockchain, the distributed ledger system that underpins cryptocurrencies. The NYT report highlights that over US$28 billion has been invested into crypto and blockchain startups around the world this year, which is 4x what was seen in 2020. https://bit.ly/3H8hmni
Semi CapEx to hit US$152 billion in 2021 as market on track for US$2 trillion by 2035.
Semiconductor makers have drastically increased their capital expenditures (CapEx) this year in response to unprecedented demand for chips that is going to last for years. Now the CEO of Mubadala, the main stockholder of GlobalFoundries, is expecting sales of semiconductors to grow exponentially, toppling a whopping US$2 trillion by mid-2030s. “It took 50 years for the semiconductor business to turn into a half a trillion-dollar business,” said Khaldoon Al Mubarak, CEO of Mubadala, in an interview with CNBC. “It is going to take probably eight to 10 years to double [by 2030 ~ 2031]. And it is going to double right after that, probably in four to five years. Chipmakers are on track to spend US$152 billion on new fabs and production equipment this year, up from US$113.1 billion last year. On percentage basis, this is a 34% increase year-over-year, which is the strongest YoY growth since 2017 when cumulative CapEx of semiconductor companies increased by 41% per annum, IC Insights reports. Contract fabs like TSMC, Samsung Foundry, and GlobalFoundries will lead the whole industry in terms of CapEx spending, as they will pour in US$53 billion in new fabs and equipment (35% of all semiconductor capital spending in 2021). TSMC, the world’s largest foundry, intended to spend between US$25 billion and US$35 billion on new manufacturing capacities as demand for its services is setting records. Furthermore, the company is preparing to ramp up production of chips using its N3 (3 nm) fabrication technology in 2023 and then N2 (2 nm) node in 2025, which requires buying new tools and building new fabs. Meanwhile memory and flash manufacturers are expected to spend US$51.9 billion on new fabs and production equipment this year. Since usage of NAND memory is increasing, spending on new flash production capacities is forecasted to reach US$27.9 billion, whereas investments in DRAM production will total US$24 billion. Interestingly, but CapEx on NAND will grow by 13% year-over-year, whereas expenditures on DRAM will increase by 34% YoY. https://bit.ly/33X2Dxk
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