On Tuesday, Payfare (TSX:PAY) filed its final long-form prospectus in which it announced pricing of its IPO. The company expects to raise $65.4M at a price of $6.00 per share. Pricing comes it at the high end of expectations, as it had expected to price between $5.00-$6.00 per share. 

The stronger than expected demand is not all that surprising given the market for digital payment SaaS companies is pretty robust. Recent IPOs in the space include PVT, NVEI and LSPD. While PVT has struggled, NVEI and LSPD have done quite well. 

Assuming the over-allotment is exercised in full, Payfare will have 43,034,519 shares outstanding which gives it a market value of approximately $258M. As we discussed last time, Payfare is growing at a rapid pace and it generated $13.1M over the last twelve months. This gives it a P/S ratio of 19.6. This is much better that what was listed previously, as the shares outstanding have been modified. 

While this is cheaper than LSPD (36x) and NVEI (20x), it is a much smaller company and less established. For its part, PVT has a market cap of $253M and generated $47M through the first nine months of 2020. All things considered, Payfare looks interesting, but caution is warranted. 

It is also worth noting that the company is vulnerable to rulings such as the one in the UK that classifies Uber workers as employees. Uber has since announced that more than 70K drivers in the UK will be reclassified as workers who deserve a minimum wage, vacation pay, and access to a pension plan. Since Payfare is focused on the Gig economy, the move from independent contractors to employees may hurt the company. 

It is unclear if such moves would have a negative impact on companies such as Payfore, but it is something worth monitoring. The offering is expected to close and begin trading on Friday under the ticker: PAY