Canadian private equity deal values hit C$6.9bn in first three months

Investment activity in Canada's buyout and private equity market was robust in the first quarter of 2020, with C$6.9 billion disbursed across 126 deals.

Investment activity in Canada’s buyout and private equity market was robust in the first quarter of 2020, according to final data released by Refinitiv, with C$6.9 billion disbursed across 126 deals. In fact, Q1 2020 was the second strongest first quarter in dollar terms on record in the Canadian market, seeing disclosed values grow 21 percent year over year. Transaction volumes also increased 3 percent in this period. Canadian PE investors participated in 75 cross-border deals worth C$21 billion in the first three months, the largest amount reported since 2015.

A full PDF report of Q1 2020 Canadian buyout and private equity market activity by Refinitiv is available here.

REPORT SUMMARY

Canada buyout and related deal values total $6.9 Billion in Q1

Canadian buyout and related investments started the year off relatively strong with $6.9 billion of deal values recorded across 126 deals either announced or completed between January and March. Despite values being down 69% from the impressive Q4, they remained up 21% year-over-year and marked the second strongest first quarter on record, only behind the $10.0 billion raised in 2018. Volumes were also up 3% from last year and saw their highest level since 2015.

No rounds with deal values of $1 billion or greater were announced in the first quarter of the year, down from four with combined deal values of $5.7 billion in Q4. Two of these previously announced transactions were completed during Q1 however, the $1.3 billion acquisition of Competence Call Center by TELUS International, backed in part by the 35% stake owned by Baring Private Equity Asia, and the $1.0 billion purchase of AltaGas Canada by an investment vehicle backed by pension plans PSP Investments and Alberta Teachers’ Retirement Fund Board. The largest announcements made in Q1 included the $840 million purchase of metal manufacturing business Canam Group by Placements CMI, Caisse de dépôt et placement du Québec, and Fonds de solidarité FTQ, as well as the merger between non-destructive testing (NDT) companies Eddyfi and NDT Global, which saw a combined equity and debt financing amount of $600 million.

While the number of Canadian buyout deals rose 3% year-over-year, the overall number of Canadian M&A transactions declined by 9% in the same period, resulting in the share of PE-backed deals climbing to 26% of overall Canada dealmaking, up from 23% just one year ago.

While only 6 Canadian buyout and related funds recorded closes in the first quarter of 2020, they raised a staggering $27.9 billion during the three month period, the largest quarter ever recorded and more than was raised throughout the entirety of each of the previous three years. The vast majority of this was for Brookfield’s fifth infrastructure fund, which closed in February and achieved total equity commitments of $25.5 billion.

Canadian companies completed 19 PE-backed exits in the beginning of the year with aggregate disclosed exit values of $1.7 billion, resulting in volumes remaining relatively steady for the past three Q1s and a 90% increase in values when compared to the lackluster start of 2019. The top exit newly announced in the first quarter was the $2.7 billion acquisition of Ontario-based salt supplier Kissner Group Holdings by California-based Stone Canyon Industries, with firms Metalmark Capital and Silvertree Capital exiting from the business.