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Canadian PE deal values reach $32 bln in 2014, highest since 2007

Buyout and other private equity investment in Canadian companies reached a seven-year high in 2014, with $32.2 billion of disclosed disbursements going to 410 deals, according to data released by Thomson Reuters. This reflected more than triple the investment levels of 2013 and the most active year in the Canadian market since 2007. Oil and gas sectors accounted for the largest share of private equity deal-making last year, or 63 transactions in total, while hospitality and entertainment sectors accounted for the largest share of dollars invested, or $12.6 billion in total. The fundraising of Canadian private equity firms in 2014 was also the second highest on record, with a total of $14.7 billion in new fund commitments.

A full report on Canadian private equity activity from Thomson Reuters is available is available here.

REPORT SUMMARY (reproduced courtesy of Thomson Reuters)

Canadian buyout-PE market trends

Deal-making activity in Canada’s buyout and related private equity (PE) market showed substantial growth in 2014. Disclosed values of transactions (announced and completed) totaled $32.2 billion as of December 31st, more than tripling the $10.3 billion in values reported in 2013. As a result, disbursement levels last year were the highest since the peak of Canada’s buyout boom in 2007.

Transactional volume was also up on a year-over-year basis. Control-stake acquisitions, growth-related and other PE deals (announced and completed) in the domestic market totaled 410 in 2014, or 23% greater than the number of deals done in 2013. Indeed, this level of deal-making set a new Canadian record, surpassing even 2007 levels

Canadian buyout-PE market activity received a significant bounce in the final three months of 2014, when 105 transactions accounted for disclosed values totaling $6.4 billion. Top deals included a $1.6 billion investment in dairy group Agropur Cooperative, $864 million in LuluLemon Athletica, and $479 million in Osisko Mining for their PE-backed acquisition of Virginia Mines.

At the end of December, thirteen large-cap transactions sized $500 million or greater captured three quarters of all disclosed disbursements made in the Canadian market.  Deals sized between $100 million and $500 million took the second largest share of the total, or 15%, while deals sized less than $100 million accounted for the balance.

Canadian market trends by sector

Canadian oil & gas companies accounted for the largest share of buyout-PE deal-making last year with 63 transactions, or 15% of the national total. Manufacturing followed a close second with 62 deals, with software companies coming in third with 40 transactions.

When measured by disclosed deal values, market trends by sector were quite different. By this measure, activity was led in the Hospitality & Entertainment sector, led by Burger King’s PE-backed acquisition of Tim Hortons at $12.5 billion. However, even without Tim Hortons, dollars invested in Canadian PE-Buyout activity were still nearly double that of the previous year. The oil & gas sector came in second with $6.6 billion in investment activity, or 20% of the year’s total.

Canadian market trends by region

The majority of buyout-PE transactions (announced and completed) in the Canadian market in 2014 involved businesses that were located in Québec (42%) and Ontario (24%).  A substantial number of deals were also recorded in Alberta, which accounted for 19% of the total number, and British Columbia, which reflected a 9% market share.

The number of large-cap deals located in Ontario in 2014 ensured that that province led market activity in disclosed dollar terms. Ontario took just under half of all disbursements this time around. Alberta and Québec followed with both receiving 23% of all disbursements last year.

Canadian investor activity in global markets

Canadian buyout and related PE funds were substantially more active in international transactions in 2014 relative to the year before. As of December 31st, Canadian funds led or participated in a total of 112 deals in other countries, and these were valued at approximately $44 billion. This compares against a total of 67 deals valued at $19 billion reported in 2013.

As in past years, the global market activity of Canadian funds was focused on businesses based in the United States, which accounted for over three-quarters of disclosed transaction values and two-thirds of all deals. Most remaining activity occurred in Europe and Latin America.

Trends in Canadian buyout-PE fund-raising

The fundraising activities of Canadian buyout funds maintained strong levels in 2014 with a total of $14.7 billion of new capital committed to 26 funds. Though 9% below the $16.1 billion raised in 2013, this was still a strong showing for Canadian funds, representing the second best year on record.

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