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Canada’s PE market sees record dealmaking in 2021: CVCA

Canada’s private equity market returned to pre-pandemic levels of activity in 2021, with a total of C$18 billion invested across 799 deals.

Canada’s private equity market returned to pre-pandemic levels of activity in 2021, with a total of C$18 billion invested across 799 deals, according to a report by the Canadian Venture Capital and Private Equity Association. Last year saw the highest PE deal count on record, 21 percent higher than the prior record set in 2019. Vigorous dealmaking engaging mostly domestic small businesses was supported in Q4 2021, when C$4.8 billion was deployed to 215 transactions.

PRESS RELEASE

CVCA 2021 Year End Private Equity Canadian Market Overview: Majority of PE in 2021 Was Invested in Small and Medium Sized Canadian Businesses

TORONTO – March 1, 2022 – Today, the Canadian Venture Capital and Private Equity Association (CVCA) released its quarterly report focused on Canadian private equity (PE). CAD $4.8B was invested across 215 deals in Q4 2021 bringing the 2021 year-end total to CAD $18B across 799 deals. The PE dollars invested, and volume figures, are a return to pre-pandemic levels; the 5-year average is CAD $19.2B and 607 deals.

2021 saw the highest PE deal count on record, 21% higher than previous record in 2019 (661 deals). 84% of all deals with disclosed values were under CAD $25M highlighting the direct connection between Canadian PE investment and Small and Medium-Sized Enterprises (SMEs). SMEs are the backbone of the Canadian economy and according to Statistics Canada, supports over 85% of all new jobs across the country.

“While the amount invested in 2021 returned to pre-pandemic levels, that amount was allocated to a record number of deals,” said Kim Furlong, Chief Executive Officer, CVCA. “Focusing on the mid market segment with three quarters of PE investment going to SMEs, this deal activity can in part be attributed to the transition of baby boomers towards retirement. Almost 60% of Canadian SME owners are at, or heading towards retirement. In a 2019 study conducted by CVCA and BDC, 49% of SME owners had planned to exit their businesses over the following five years and a significant portion intended to sell to non-family members. While ownership of Canada’s SMEs transitions across generations, private equity also plays a role in succession planning and enabling the growth of our companies.”

2021 saw the highest number of exits on record with 88 exits totaling CAD $6.4B, making it the second-lowest total exit value based on our records. This includes the highest number of IPOs on record with the second-lowest amount raised on record (CAD $1.9B across 6 IPOs). The same trend was also seen across secondary buyout deals (CAD $2B across 18 buyouts), demonstrating a 200% increase in the number of secondary buyouts with almost 24% less value in dollars raised compared to 2020. The trend can be attributed to the rise of continuation vehicles that allow PE investors to stay the course longer and grow their portfolios.

Dollars invested in most sectors increased compared to 2020, with the biggest surge across Financial Services (a 1412% increase), Business Products & Services (a 312% increase), and Cleantech (a 189% increase).

About the CVCA

Our vision: A thriving Canadian economy driven by private capital
Our Mission: CVCA’s mission is to help our members fuel the economy of the future by growing the businesses of today. We do this by supporting and connecting a vibrant private capital industry with advocacy, research, and education.

CVCA is also the nation’s ultimate resource for data on Canadian private capital investments. Please visit: http://www.cvca.ca