Corel watchers show little interest in IPO activity

Corel Corp. is planning to go public after operating as a private company for more than two years, but at least one former shareholder is hesitant to get involved again.

Ottawa’s Corel was bought out by San Francisco investment firm Vector Capital Group in 2003. The deal met with some resistance from the software company’s user community, a small band of which formed in an effort to derail the sale. The group alleged that Corel had suffered due to corporate mismanagement and lack of effective software distribution but the Corel sale went through as planned after shareholders voted to accept Vector’s offer of US$1.05 a share.

On Tuesday, Corel said it plans to make shares available again and in regulatory filings stated intent to sell up to eight million shares for US$18 to US$20 a share. Corel has also applied for listings on the Nasdaq and Toronto Stock Exchange. After the IPO is issued, Vector Capital’s ownership stake in Corel will fall from its current level of 98 per cent to 66 per cent.

Robert Alexander, of Markham Trophy Inc. in Markham, Ont., was a Corel shareholder and one of the roughly half a dozen founders of He said he probably won’t be among Corel’s latest round of public shareholders.

“In most cases, those people that held Corel (stock) are once bitten, twice shy,” he said. disbanded after the Vector sale went through, but Alexander isn’t bitter about the result.

“I don’t really have any sour grapes. They did what they wanted to do, we didn’t like it and we lost. I’ve had people (ask me), ‘What do you think?’ Well, it’s in the past now. It’s done.”

His said his reluctance to get involved again with Corel ownership stems from a lack of knowledge about the internal workings of the company since it was taken private. “We don’t know if they’ve made headway. We don’t know if they’ve spun anything off. They’re a private company so they don’t have to tell anybody. It’s difficult to assess what it means to investors,” he said.

Regardless of its financial machinations and ownership structure, the company has been losing marketshare and mindshare for some time, according to one reseller.

“Really, Microsoft is quite a bit ahead in the market,” said Jason Henderson, owner of Ottawa-based Tidal Wave Systems. “No one looks to buy Corel for most of their purchases. They all go with Microsoft Word and Office and that sort of stuff.”

But with new releases from Corel in the last year, Henderson said he’s started to take more of an interest in potentially selling the company’s products. “I figured . . . I’d check back into it,” he said. The IPO won’t necessarily help Corel sell more software, he added, but could help it draw more attention in the short term. “Personally, I might look at investing in it. It’s worth looking at it, anyways,” he said.

David Singh, a Scarborough, Ont.-based independent technology consultant, said he was recently asked by a client to evaluate Corel software.

“Corel has a pretty strong following. It’s like the Apples of the world. When I hear Corel, I think it’s Canadian. I understand it’s got an American ownership, but to me it’s a Canadian company,” he said.

As for the Corel IPO, “I don’t think it’s going to be a Tim Horton’s or a Google,” he said. “It just depends on the buzz.”

But no amount of buzz has helped Corel hang onto one of its former strongholds, the legal market, said Simon Chester, a partner at Toronto law firm Heenan Blaikie. Corel continues to hold sway over government customers, but “the further away you get from Ottawa, the less interest there is,” he said.

“The market is so locked into (Microsoft) Word and the entire Office suite,” he said. “If clients are on Word, they expect us to communicate in Word.”

Chester added that a Corel IPO may stir the interest of the financial specialists in his firm, but won’t get them to migrate over to the firm’s software. “The legal community flew the coop around Word Perfect 6 or Word Perfect 7,” he said. “Feature for feature, it may well be that Corel Word Perfect outmatches Word, but not in sufficiently great ways that the legal user community will migrate.”

Alexander may not have any immediate interest in buying Corel shares, but he continues to use the firm’s software at Markham Trophy. “In the case of the product itself, I have no complaints,” he said. “I use it myself daily. I even upgraded to their latest product.”

A Corel spokesperson said that the company was not able to comment on the status of its IPO or the future of the firm beyond its regulatory filings in the U.S. and Canada.

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