World News – CA – Shares of Vancouver-based BBTV Holdings make disappointing TSX debut amid widespread market sell-off

This translation was automatically generated and has not been checked for accuracy. Full disclaimer

Shahrzad Rafati, CEO of BroadbandTV Corp, takes part in a panel discussion at the Businesswomen Leaders Working Group Forum on the sidelines of the G20 summit in Buenos Aires, Argentina, on Nov 29, 2018

Vancouver’s BBTV Holdings Inc got off to a rocky start on the Toronto Stock Exchange on Wednesday, eclipsing its milestone of closing Canada’s largest public offering from a one-woman-led company

The subordinate voting shares of BBTV, the parent company of online video platform BroadbandTV, traded lower all day and closed at $ 15, or $ 6 3% off its issue price of $ 16, shares having fallen widely in North American markets BBTV amassed $ 172 4 million in IPO

BBTV CEO Shahrzad Rafati avoided debut saying in an interview on Wednesday: « I’m not [worried] at all on day one, maybe not like we wanted Markets can be tough at times We’re here for the long haul We really want to gain momentum today, but we’re building a very strong business « 

Ms. Rafati, who holds 83% control of the votes after the IPO, said the offer « opens up new horizons and opens the door for countless women and girls who envision a future with more than potential to be leaders »

Two sources close to the deal said investor demand was relatively subdued as BBTV received orders for shares equal to twice the offer value and valued the shares at a low $ 14- $ 22 range set by underwriters This compares to several recent Canadian tech deals that were increased after receiving orders 10 or more times than the offer sizes Canaccord Genuity and Scotia Capital led the underwriting syndicate

One of the sources said the institutions bought 60% of the offering Individual investors bought 40%, more than double their typical IPO allocation SP Rafati and director Hamed Shahbazi bought 10% of the offer The Globe and Mail does not name the sources because they were not authorized to speak publicly on the matter

BroadbandTV helps video creators make more money from advertising their content on YouTube, Facebook and other online channels than if they publish it themselves With the collective weight of their platform -form, BroadbandTV – the second largest online video provider behind Google – sells aggregated content to advertisers in the form of packages, which helps increase creator views and revenue BroadbandTV videos garnered 439 billion views last year

The main objective of the IPO was to end a deadlock between Ms Rafati and European media giant Bertelsmann SE & Co, which bought 51% of BroadbandTV through its subsidiary RTL Group for 36 million euros. dollars in 2013 The deal gave RTL and minority shareholders the right to buy each other out or drag the other into a sale SP Rafati stayed on to run BroadbandTV

But in January 2017 RTL refused to exercise its repurchase right At the time, Ms Rafati said that BroadbandTV was « certainly » worth US $ 1 billion (Its market capitalization was US $ 308 million at the time). Wednesday’s closing) But RTL chose not to pay the amount determined in a fair market value assessment.Finally last year, RTL agreed to sell its stake to minority shareholders for $ 158.8 million, which peaked with the IPO BBTV was a holding company for their stake in BroadbandTV; he now owns the full entity

BroadbandTV generated $ 372 4 million in revenue in 2019 but 895% of that went to content creators, meaning actual revenue was closer to $ 40 million It lost $ 8 2 million last year

The company strives to sell « value added » services to creators, such as direct advertising campaigns and the creation of mobile applications This activity generates much higher margins and represents less than 30% of the BroadbandTV SP gross profit Rafati said the company has a « multi-billion dollar opportunity » to move more existing creative customers to higher value services

BroadbandTV’s pageviews growth rate slowed last year to 42 percent from 205% in 2018 after dropping out content creators deemed ‘objectionable’ (Revenue growth fell to 112% from 38 % during the same period)

Revenue was also low at the start of the pandemic But Ms Rafati said pageviews and revenue increased 15% and 25% respectively in the third quarter, adding that BroadbandTV would show « similar growth rates moving forward »

Your time is precious Get the Top Business Headlines newsletter delivered to your inbox in the morning or evening Sign up today

Welcome to The Globe and Mail Comments Community This is a space where subscribers can interact with each other and with Globe staff Non-subscribers can read and sort comments, but will not be able to interact with them Click here to subscribe

If you would like to write a letter to the editor, please forward it to letters @ globeandmailcom Readers can also interact with The Globe on Facebook and Twitter

Welcome to The Globe and Mail Comments Community This is a space where subscribers can interact with each other and with Globe staff Non-subscribers can read and sort comments, but will not be able to interact with them Click here to subscribe

If you would like to write a letter to the editor, please forward it to letters @ globeandmailcom Readers can also interact with The Globe on Facebook and Twitter

Welcome to The Globe and Mail’s comments community This is a space where subscribers can interact with each other and with Globe staff

BroadbandTV Corp, RTL Group, Shahrzad Rafati, IPO, TSX