Canada’s private equity market rebounded in 2017, with $26.3 billion invested in more than 603 deals, up 90 percent compared to $13.8 billion invested the year before, according to a report by the Canadian Venture Capital and Private Equity Association (CVCA). Large-caps played a crucial role in 2017 trends, with the number of deals sized $500 million or more, such as the $4.8 billion buyout of DH Corp, doubling year over year and taking 60 percent of the total invested. The report found Canada’s industrial-manufacturing sector accounting for the largest share of PE deals last year (19 percent), followed by the information technology sector (16 percent).
CVCA’s overview of 2017 Canadian venture capital and private equity market trends can be viewed here.
CVCA 2017 PE Canadian Market Overview: Rebound Year for Canadian Private Equity Investment
$26.3B invested over 603 deals in 2017; amount invested and exits both double from previous year
March 6, 2018 – Toronto, ON – Total PE investment in 2017 saw a dramatic year-over-year rise to $26.3B (compared to $13.8B in 2016) over 603 deals (compared to 542 deals in 2016); an incredible 90% year-over-year surge and results in a return to historically high levels seen in 2014 and 2015.
There were 14 deals in the $500M+ category (totalling $15.7B), doubling the seven large deals (totalling $7.1B) in 2016. Notable $1B+ deals this year included the $4.8B privatization of Toronto-based DH Corporation in Q2, the $2.2B acquisition of Montreal-based Garda World Security Corporation in Q1 and the $1.1B private placement in Montreal-based Osisko Gold Royalties Limited by La Caisse de dépôt et placement du Québec (CDPQ) and Fonds de solidarité FTQ in Q3.
“We continue to see increasing Canadian private equity investment in the industrial and manufacturing and ICT sectors,” said Mike Woollatt, CEO, CVCA. “The increase represents the continued evolution of the global economy and 2017 levels are a testament to Canada’s healthy investment climate.”
Almost a fifth (19%) of all PE deal deals in 2017 were closed in the industrial and manufacturing sector with information communications technology (ICT) companies receiving the second largest share at 16%. Since 2013, both these sectors have seen a dramatic increase in deal flow, with the industrial and manufacturing sector seeing a 216% increase while ICT experiencing a 263% increase in deal activity.
89 deals totalling $6.7B (15%) of all PE deals in 2017 were made in Montreal-based companies, while both Calgary-based (54 deals totalling $3.1B) and Montérègie-based (53 deals totalling $0.5B) companies each receiving a 9% share.
Fuelled by a high valuation environment, the exit floodgates opened in 2017. There have been more than twice the number of PE exits (149) compared to only 65 last year. There were six IPOs, including the $445M dual listing of the iconic Canada Goose on (TSE/NYSE: GOOS), the $300M TSX-debut of Jamieson Laboratories Ltd (TSE: JWEL), the $200M IPO of Neo Performance Materials (TSE: NEO) and the $200M IPO of Roots Corp (TSE: ROOT).
Private Equity Highlights:
– Private equity activity climbed 12% compared to the same quarter last year ($4.2B to $4.7B).
– This brings the total PE dollars invested in 2017 to $26.3B over 603 deals, a 90% spike compared to the $13.8B over 542 deals last year and a 15% increase over the 2015 total of $22.9B over 425 deals.
– The number of $500M+ deals almost doubled to $15.7B (14 deals) accounting for 60% of total dollars invested in 2017 (compared to only $7.1B (7 deals) in 2016). These included the following three $1B+ mega-deals:
– The $4.8B privatization of Toronto-based DH Corporation, the $2.2B acquisition of Montreal-based Garda World Security Corp. and the $1.1B private placement in Montreal-based Osisko Gold Royalties Ltd. by Caisse de dépôt et placement du Québec (CDPQ) and Fonds de solidarité FTQ.
– Deal activity in all small-to-mid market segments have exceeded last year’s totals:
– 66 deals between $25M-$100M have surpassed the 2016 total (49) by 35% with a total value of $3.2B.
– 28 deals between $100M-$500M have doubled the 2016 total (14) with a total value of $5.9B.
– 15% (89 deals totalling $6.7B) of all PE deals went to Montreal-based companies, with Calgary- and Montérègie-based companies each receiving a 9% share (54 deals totalling $3.1B and 53 deals totalling $0.5B respectively). Toronto-based companies received a 7% share of deal flow (44 deals totaling $5.4B).
– Almost a fifth (19%) of PE deals this year have been closed in the industrial & manufacturing sector with ICT companies receiving the second largest share (16%); both these sectors have been receiving a steadily increasing share of PE deal flow since 2013 when industrial & manufacturing captured only a 14% share and ICT a 10% share. Inversely, the oil and gas sector deal flow share has dropped from 19% in 2013 to 7% in 2017.
– Six IPOs including the $445M dual listing of the iconic Canada Goose on (TSE/NYSE: GOOS), the $300M TSX-debut of Jamieson Laboratories Ltd (TSE: JWEL), the $200M IPO of Neo Performance Materials (TSE: NEO) and the $200M IPO of Roots Corp (TSE: ROOT).
– There have been more than twice the number of PE exits (149) compared to 65 last year.
– Secondary buyouts have contributed to almost half (46%) of the $7.4B in total exit value.
• Q4 VC & PE Canadian Market Overview
About the CVCA
The CVCA is the voice of Canada’s venture capital and private equity industry. We are focused on improving the private capital ecosystem by broadening industry awareness and providing market research, networking, and professional development opportunities. We also advocate on behalf of the industry to ensure sound public policy that encourages a favourable investment environment. The CVCA works alongside its members, who represent the vast majority of private capital firms in Canada, to improve the industry and drive innovation and growth. Please visit: http://www.cvca.ca.
For more information or to arrange an interview, please contact:
Manager, Content & Media
Direct: 416-487-0519, ext. 201
Photo courtesy of blackred/E+/Getty Images