Bank deal in Canada; preliminary talks underway in PE energy deal; Riverside bets on Italian food supplements

Royal Bank of Canada is buying HSBC's Canadian banking business.

Good morning, Hubsters. MK Flynn here with today’s Wire.

There’s lots going on this morning, including a big financial services deal announcement and a potential bid for an energy-focused private equity firm. And we’ve got an interview with The Riverside Company about a recent Italian acquisition and highlights from Buyouts’ new fundraising report.

Let’s start with a big deal announcement.

O Canada. Royal Bank of Canada has just agreed to buy HSBC’s banking business in Canada for $10.1 billion.

“HSBC Canada offers the opportunity to add a complementary business and client base in the market we know best and where we can deliver strong returns and client value given our financial strength and award-winning service,” said Dave McKay, president and CEO, RBC. “This also positions us as the bank of choice for commercial clients with international needs, newcomers to Canada and affluent clients who need global banking and wealth management capabilities. It will help us better serve global clients looking to invest and grow in Canada.”

Accounting for about 2 percent of Canadian deposits and mortgages, HSBC Canada has $134 billion in assets as of September 30, 2022, approximately 130 branches and 4,200 full-time equivalent employees.

The financial sector is highly competitive in Canada, with 50 banks and hundreds of credit unions and fintechs competing to serve Canadians, RBC’s press release points out.

Energy transition. One potential private equity deal we’re keeping tabs on: Bridgepoint Group in London said it is evaluating a possible bid for Energy Capital Partners, the Wall Street Journal reported.

Bridgepoint “confirms it is evaluating a number of potential strategic opportunities in line with its stated strategy and as confirmed in its recent trading update,” according to a statement. “All such discussions, including those held with Energy Capital Partners, remain at an early stage and there is no certainty that any transaction will result. Further announcements will be made if appropriate.”

ECP founder and senior partner Doug Kimmelman declined to comment.

We’ll keep you posted if anything further develops. (Note: Bridgepoint owns PEI Group, the publisher of PE Hub.)

Nutraceuticals. Prolific lower mid-market PE firm The Riverside Company agreed earlier this month to aquire a controlling stake in BioDue, a Sambuca, Italy-based company that develops, manufactures and commercializes food supplements, medical devices and cosmetics.

PE Hub Europe’s Nina Lindholm spoke to Riverside partner Damien Gaudin about the deal.
“Italy is at the forefront of the industry in Europe,” Gaudin told Nina. “It has the highest consumption per capita of nutraceuticals in Europe. Therefore, it’s no surprise that you have some significant players in terms of size and technology active in the sector, BioDue being one of them.”

The nutraceuticals industry has proven to be resilient, according to Gaudin, as it is fuelled by demographic tailwinds such as growing populations and ageing populations, as well as some diseases becoming more prominent. That has led to an increasing focus by consumers on health and wellness, Gaudin explained.

As healthcare and consumer are two of Riverside’s core sectors, BioDue fits well in the firm’s portfolio. “Nutraceuticals are at the crossroad between consumer and healthcare,” Gaudin said.

Read Nina’s interview on PE Hub Europe, which includes info on the type of add-ons Riverside is considering for BioDue, as well as its geographical plans and Gaudin’s thoughts on the broader nutraceuticals sector.

Don’t miss. Are you signed up for PE Hub Europe? We recently launched the new website, which provides in-depth coverage and exclusive insight on European private equity deals.

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Fundraising dip. Private equity fundraising declined in the third quarter, as overstretched LPs continued to erect supply barriers to proliferating funds, according to Buyouts’ Q3 2022 fundraising report.

Some 252 buyout, growth equity, venture capital and other PE vehicles in North America secured $111 billion between July and September, down 20 percent from the second quarter. This marks the second consecutive quarterly dip in capital inflows this year.

In the first three quarters, fundraising hit nearly $410 billion, effectively matching the amount a year earlier, owing to greater inflows in Q3 2022 versus Q3 2021. Over the same period, fund closings, totaling 736 at the end of September, fell 27 percent.

Fewer fund closings resulted in relatively larger capital pools. In the first three quarters, the average fund size was $556 million, compared to $408 million a year earlier, pointing to a stronger LP focus on re-ups with large incumbents.

To discover more, read the full story and download the report.

Today is GivingTuesday. At PEI Group this month, we’ve been contributing to a Holiday Food Drive for City Harvest, a food rescue organization that helps feed New Yorkers who are struggling to make ends meet, and raising money for men’s health, including suicide prevention, prostate cancer and testicular cancer, through Movember.

Big thanks to Real Estate Capital USA’s Samantha Rowan and Buyouts’ Karl Shmavonian for organizing our efforts.

Tune in tomorrow for Wire Wednesday with Buyouts’ Chris Witkowsky, and PE Hub’s Aaron Weitzman will take the helm on Thursday and Friday.

I’ll be back on Wire duty on Monday. In the meantime, you can reach me, as always, at mk.flynn@peimedia.com.

Cheers,

MK