Private equity investors disbursed $1.9 billion to 130 deals in Canada in the first quarter of 2019, according to a report by the Canadian Venture Capital and Private Equity Association (CVCA).
CVCA said investments levels in Q1 2019 were 72 percent lower as compared to the same time last year.
CEO Kim Furlong said CVCA members see their PE deal opportunities being impacted by the current high valuation environment.
A fifth of all deals in Q1 2019 were closed in the information and communication technology sector, which also took almost half of the total invested. The industrial and manufacturing and consumer and retail sectors together captured 29 percent of all dollars.
CVCA’s overview of Q1 2019 Canadian venture capital and private equity market trends can be viewed here.
CVCA Q1 2019 Private Equity Canadian Market Overview: PE Experiences Sluggish Start to 2019
Private Equity Deal Flow and Exits Slow in First Quarter
TORONTO – May 28, 2019 – The Canadian Venture Capital and Private Equity Association (CVCA) today released its quarterly report focused on Canadian private equity (PE). PE Investment was 72% lower in the first quarter of 2019 compared to the same period last year with CAD $1.9B invested over 130 deals. The pace of private equity also slowed in the first quarter with only 9 M&A exits totalling CAD $270M.
The largest disclosed deals in Q1 2019 were the CAD $199M acquisition of British-Columbia-based Prepac Holdings Inc. by Torquest Partners with financing support from Export Development Canada (EDC); and Goodlife Fitness Centres Inc.’s CAD $100M debt financing from Penfund Inc.
“Our private equity members are reporting that the current high valuation environment continues to impact their deal flow,” said Kim Furlong, Chief Executive Officer, Canadian Venture Capital and Private Equity Association. “While the first quarter was slow, we anticipate that private equity activity will rebound in subsequent quarters.”
A fifth of all PE deals in the first quarter (27 out of 130) were closed in the Information and Communication Technologies (ICT) sector totaling CAD $929M, representing almost half of all invested dollars. The Industrial & Manufacturing and Consumer & Retail sectors closed 43 deals combined receiving CAD $562M or 29% of all dollars.
Four out of every 10 deals in Q1 2019 were debt transactions with deal sizes averaging CAD $11.8M, which is one and a half times higher than Q1 2018.
Canadian Private Equity Highlights
• $1.9B was invested over 130 deals in the first quarter of 2019, 72% lower than the same quarter last year
• All deals with disclosed values were below $500M with 62% (80 out of 130) of all deals with values less than $25M
• The largest disclosed deals included:
• $199M acquisition of BC-based Prepac Holdings Inc. by Torquest Partners with financing support from Export Development Canada (EDC)
• $100M debt financing to GoodLife Fitness Centers Inc. from Penfund Inc.
• 19% (25 deals totalling $840M) of all PE deals went to Montreal-based companies, with Toronto-based companies receiving a 15% share (20 deals totalling $314M)
• A fifth of all deals (27 out of 130) were closed in ICT sector companies totalling $929M, almost half of all total dollars disbursed; 43 deals closed in the Industrial & Manufacturing and Consumer & Retail sectors combined receiving a total of $562M or 29% of all dollars.
• Four out of every 10 were debt deals with an average deal size of $11.8M which is 1.5 times greater than last year
• Q1 saw 9 M&A exits (totalling $270M)
About the CVCA
We’re how collaboration happens and how innovation and growth thrive.
The CVCA is Canada’s professional association for the venture capital and private equity industry. Our services and support establish a favourable and competitive ecosystem and lay the foundation for greater collaboration, innovation, growth and market intelligence. We strongly advocate for fair and competitive policy to keep our industry energized.
From coast to coast, we bring members together; connecting private capital professionals to each other generating meaningful partnerships, enabling connections to foster and knowledge to prosper.
We’re also the nation’s ultimate resource for data on Canadian private capital investments. Please visit: http://www.cvca.ca.
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