BlackBerry's spinoff should bring relief to Toronto's IPO market

financialpost.com:

There may be some relief in sight for Canada’s beleaguered initial public offering market: BlackBerry Ltd.’s spinoff its Internet of Things business.

The cellphone giant turned security software provider said Oct. 4 it’s planning an initial public offering (IPO) of the unit in the first half of its next fiscal year, which begins in March. The decision followed a months-long strategic review that had Wall Street speculating whether BlackBerry would split its segments, sell parts of the business or the whole company, whose market value stood at around US$2.5 billion before the announcement.

The Internet of Things (IoT) business is focused on giving things people use every day, such as appliances and cars, online capabilities and sensors. RBC Capital Markets values this segment at US$1.7 billion and its less valuable cybersecurity business at US$450 million.

“We see the separation as a positive,” Raymond James analyst Steven Li said in a note Oct. 5, adding that the value of the business BlackBerry plans to spin off is “being masked by the ongoing struggles and churn in the cyber segment.”

BlackBerry did not respond to a request for comment on theIPO.

If the Waterloo, Ont.-based company achieves that valuation and decides to list in Canada, the offering would be a dramatic boost for IPO activity in Toronto. Firms have raised just $419 million through IPOs in the first eight months of this year, 78 per cent less than the tally for the same period in 2022.

BlackBerry shares fell as much as 10 per cent on Oct. 5.

BlackBerry’s announcement comes as Wall Street prepares for a wave of spinoffs as household names including Kellogg Co., Intel Corp. and General Electric Co. push parts of their business out into the market.

“Both the