Canada’s private equity (PE) market saw $3 billion invested in 158 deals in the second quarter of 2019, up 54 percent from three months earlier but down 63 percent from Q2 2018, according to a report by the Canadian Venture Capital and Private Equity Association (CVCA).
PE investment between January and June totalled $4.9 billion, the lowest amount invested in a first half since CVCA began collecting data (2013). The dollars went to 289 deals in this period, down from 324 deals in H1 2018.
CVCA CEO Kim Furlong said the slowdown in Canadian PE investing in H1 2019 is reflected in other markets, including in the United States.
There was a record share of deals in the information and communications technology sector in Q2 2019 (20 percent). The industrial and manufacturing sector captured a comparable share (21 percent).
CVCA’s overview of Q2 2019 Canadian venture capital and private equity market trends can be viewed here.
CVCA H1 2019 Private Equity Canadian Market Overview: PE Investment Up Over 50% Since Q1; Lowest H1 Performance On Record
Major pending deals, valued over CAD $6B, set to positively change sector trajectory
August 27, 2019
TORONTO–(BUSINESS WIRE)–The Canadian Venture Capital and Private Equity Association (CVCA) today released its quarterly report focused on Canadian private equity. CAD $3B was invested over 158 deals in the second quarter, 54% higher than the first quarter of 2019. This brings the total PE investment in the first half of the year to CAD $4.89B, the lowest dollars invested in a first half since the CVCA began collecting data in 2013. Deal activity in H1 2019 (289 deals) was lower than H1 2018 (324 deals) and H1 2017 (292 deals)
There are at least two pending major deals, including the CAD $5B privatization by Onex Corporation of Calgary-based WestJet Airlines Ltd. and Brookfield Asset Management’s pending CAD $1B sale of Ontario-based BGIS to CCMP Capital Advisors which are expected to positively change the trajectory of PE investment performance this year.
Apart from a single mega-deal (CAD $500M+), all other deals with disclosed values were below CAD $500M and 66% (192 deals out of 289) were under CAD $25M. The largest disclosed PE deals included the CAD $1.4B mega-buyout by Thoma Bravo LLC of privately held London, Ontario-based Autodata Solutions Inc. and the CAD $445M acquisition of Toronto-based Gluskin Sheff & Associates Inc. by Onex Corporation.
There was a record share of deals in information and communication technology (ICT) companies (20%) in the second quarter, which is 3% higher than its share in 2017 and 2018. The industrial and manufacturing sector saw a similar amount of deal flow at 21%.
“The first half of 2019 has seen a slow down in PE dollars invested in Canadian and other markets including the United States,” said Kim Furlong, Chief Executive Officer, CVCA. “High valuation and quality of deals have been said to be driving this trend. In Canada, the size of funds and deal activity remain strong. CVCA will be closely monitoring sector indicators in the second half.”
PE exits also slowed this quarter with only 15 M&A exits totalling CAD $851M. Notable among the 15 was the CAD $570M corporate acquisition of Toronto-based Intelex Technologies Inc. from HarbourVest Partners, LLC and JMI Equity as well as the CAD $260M acquisition of Langley-based 4Refuel Canada LP by Finning International Inc.
Canadian Private Equity Highlights
$3B was invested over 158 deals in the second quarter of 2019, 54% higher than the amount invested in the previous quarter but 63% lower than the same quarter from last year
The average YTD deal size ($18.8M) was less than half the average deal size in the previous 3-year period between 2016-2018 ($35.4M)
With the exception of a single $1.4B mega-deal all other deals with disclosed values were below $500M with 66% (192 out of 289) of them under $25M
The largest disclosed PE deals included:
$1.4B mega-buyout by Thoma Bravo LLC of privately held London-based Autodata Solutions Inc.
$445M acquisition of Toronto-based Gluskin Sheff + Associates Inc. by ONEX
6 out of every 10 PE deals were in the province of Quebec totalling $1.8B; Ontario captured a fifth of deal flow totalling $2.4B
A quarter of YTD deal flow involved buyouts totalling $2.2B with Ontario-based companies garnering the largest share at 39% (28 deals totalling $1.9B)
There were 51 deals in Montreal-based companies (18%) totalling $1.1B followed by Toronto-based companies which captured a 8% share of activity with 22 deals worth $779M
A record share of deal flow (20%) went into ICT companies, 3 percentage points higher than its share in 2017 and 2018; the Industrial and Manufacturing sector maintained a 21% share
4 out of every 10 were debt deals with an average deal size of $7M which is 9% lower than last year
The pace of PE exits slowed with only 15 M&A exits (totalling $851M). These included:
The $570M corporate acquisition of Toronto-based Intelex Technologies Inc. from HarbourVest Partners, LLC and JMI Equity
The $260M acquisition of Langley-based 4Refuel Canada LP by Finning International Inc.
CVCA H1 2019 Venture Capital & Private Equity Canadian Market Overview
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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