Investment by private equity buyout firms into Canadian companies continued its record-setting pace during the second quarter, according to the industry’s quarterly statistical report from
Investment by private equity buyout firms into Canadian companies continued its record-setting pace during the second quarter, according to the industry’s quarterly statistical report from Canada’s Venture Capital & Private Equity Association (CVCA) and research partner Thomson Financial.
A total of 52 transactions were announced during the quarter with a total value of approximately CAD55.6bn, led by the record-breaking CAD47.2bn Bell Canada buyout. This is up dramatically from the 44 transactions recorded during the first quarter with a total value of CAD5.4bn.
‘It is important to note that we achieved record growth in our buyout markets even without the massive Bell Canada transaction,’ says Rick Nathan, CVCA president and managing director of Kensington Capital Partners, ‘A total of CAD8.4bn in other buyouts were announced during the quarter, which would have been a record quarterly performance on its own.’
During the first half of 2007, a total of 96 Canadian buyout transactions were announced with a total value of CAD61.0bn, including CAD13.8bn outside the Bell Canada transaction. This tally already exceeds the full year totals for 2006 when 101 buyouts were recorded with a total value of CAD11.6bn.
The growth in the Canadian market reflects similar growth in the US and European markets. During the past few quarters, activity in Canada has trailed other markets because of a relative lack of mega-deals. The Bell Canada transaction represents a spike in market activity that puts Canada ahead of other international markets during the second quarter, based on the relative size of the country’s economy. During the second quarter of 2007, a total of CAD242bn was invested in US-based buyout transactions, with CAD155bn invested in buyouts in the rest of the world.
Fundraising by Canadian buyout funds has declined from its peak level in 2006, with a total of CAD1.4bn raised through the first half of 2007, compared to CAD7.9bn raised throughout the whole of 2006. Most large Canadian buyout firms raised new capital during 2006, and would ordinarily expect to invest those funds for two to three years before returning to the market to refresh their funding, so the CVCA says the decline in fundraising in the current year represents part of the normal market cycle.
Canada’s Venture Capital & Private Equity Association was founded in 1974 to represent the country’s venture capital and private equity industry, and its more than 1,200 member firms and organisations manage the majority of Canada’s pools of capital committed to venture capital and private equity investments. The CVCA promotes professional development, networking, communication, research and education within the sector and represents the industry in public policy matters.
Thomson Financial, which had 2006 revenues of USD2bn, is a provider of information and technology solutions to the worldwide financial community, serving clients in more than 70 countries. Thomson Financial is part of the Thomson Corporation, which provides information, software tools and applications to professionals in the fields of law, tax, accounting, financial services, scientific research and healthcare.
