The Ministry of the Economy, headed by Pierre Fitzgibbon, secretly bought $49 million worth of shares in the Quebec company Lightspeed Commerce, which has been battered on the stock market for several months.
No press release was published about this investment, which is nevertheless one of the most important made this year by the Ministry of Economy, Energy and Innovation of Quebec (MEIE).
“Given the pre-election period, it was decided not to announce the intervention,” said the Log Mathieu St-Amand, spokesperson for Minister Pierre Fitzgibbon.
Buying shares on the markets
Another unusual element, the government carried out the transaction on the stock market – and not as part of an issue of new shares of the company, which specializes in payment software for merchants.
The $49 million invested by Quebec therefore went to existing shareholders and not to Lightspeed’s coffers.
For the government, the benefit of the operation was likely to increase the company’s Quebec shareholding and support its stock market price.
An ineffective gesture?
The exact dates of the stock purchases are unknown. At the end of July, the title of Lightspeed experienced a surge of 30%, from $23 to $31, before falling again in early August, after the publication of decent financial results, nothing more.
Lightspeed then continued its stock market tumble, dropping as low as $18.50 this week, 88% below its all-time high of nearly $160, reached in September 2021.
The company’s stock was particularly affected by the publication of a damning report by a short seller last year and by the general decline in technology stocks on the stock market.
“The investment was made by the Fund for Business Growth as part of a purchase of shares on the public markets in order to support a Quebec leader in its sector of activity”, specified the MEIE in an email. .
“The investment was aimed in particular at maintaining its head office in Quebec,” it was added.
The previous Rona
The last known case of a similar investment is that of $156 million made in 2012 and 2013 by Investissement Québec (IQ) in RONA, which was then the subject of a hostile takeover bid by the American giant. Lowes.
The government’s $49 million boost to Lightspeed comes on top of the roughly $200 million in public funds injected into the company over the past few years.
In 2015, the Caisse de dépôt and IQ had together invested more than $40 million in Lightspeed. Then, in 2017, the Caisse had bet $ 170 million more in the company while IQ had gone there with a new unquantified investment. The Caisse and IQ currently own 14.5% and 1.4% of Lightspeed respectively, compared to about 1.25% for the government.
Note that as part of an agreement concluded with the Caisse in 2019, Lightspeed had already committed to maintaining its head office in Quebec until at least 2026.
Note also that since December 2020, Lightspeed is more vulnerable to a hostile takeover. To finance a half-billion-dollar acquisition, the company then issued stock, which forced it to eliminate its multi-voting shares. These gave control of Lightspeed to its founder, Dax Dasilva, and the Caisse.
In 2020 and 2021, Mr. Dasilva sold more than $50 million of shares in Lightspeed, which helped shrink his stake in the company from 19% to less than 10%. For its part, the Caisse sold approximately $100 million in shares in 2020.
– 88% Lightspeed’s stock falls from its high of nearly $160 reached in September 2021 to its low of $18.50 recorded earlier this week
A turbulent year
February – Dax Dasilva hands over the position of CEO to Jean Paul Chauvet.
July – Lightspeed says it paid US$70 million in compensation to its six top executives.
August – Lightspeed announces the opening of a free restaurant for its employees at its Montreal headquarters.
September – The newspaper reveals that Lightspeed struggles to offer service in French to its Quebec customers.
October – Lightspeed becomes a shareholder of the Blue Basket.