Canadian buyout sector soars


The numbers for Canadian private equity investing are due to come out today and one thing to take from the report is that buyouts are soaring up north. Sure, Canadian buyout fund-raising can’t hold a candle to what The Blackstone Group and other mega fund-raisers do in a few weeks’ time, but what’s going on in Canada is still noteworthy.

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Buyout fund-raising in Canada reached $6.4 billion through the first three quarters, which is up more than four and a half times the full-year total of 2005, according to a survey by Thomson Financial and Canada’s Venture Capital & Private Equity Association (CVCA).

“What’s driving the growth is returns,” says Rick Nathan, president of the CVCA and a managing director at Kensington Capital Partners. “Our buyout sector as a whole has been doing great. It’s averaging something like 20% for the industry.”

However, the caveat to the report is that while Canada is seeing a growth in buyout funds—which mirrors what’s happening internationally—venture activity in the Great White North slows.

Still more uncertain is what’s going to happen in the Canadian private equity community as tax laws change.

For now, the 30% credit for investing in venture funds is still in place. But Nathan says it has contributed to market uncertainty.