


Canada’s PE industry is poised to complete a second consecutive year of robust fundraising.
A preliminary look at the Thomson Reuters data suggests that 25 buyout, mezzanine and other PE funds have secured more than $14.4 billion in committed capital in 2014.
While that’s down 10 percent from the $16.1 billion committed in 2013, it represents the second largest annual raise by Canadian funds to date, surpassing the heights reached during the buyout boom.
Throughout the year, GPs have testified to frothier fundraising conditions. The improved environment was said to be due to stronger distributions going to LPs, as well as higher public market values, which left many institutional investors under-allocated to PE. Additionally, LPs were attracted to the specialty fund offerings of several Canadian teams, including those focused on real assets.
As a result, a key theme of 2014 was bigger partnerships.
A case in point is Onex Corp, which initially set the target of its fourth fund, Onex Partners IV, below the US$4.7 billion raised by Fund III (2009). In the end, Fund IV was the largest in the firm’s history, raising almost US$5.7 billion, or 26 percent more than its target.
Expectations were also exceeded in the mid-market space. For example, new offerings of Imperial Capital Group, Ironbridge Equity Partners and Novacap all raised more than originally planned.
And Clairvest Group’s fifth fund, Clairvest Equity Partners V, appeared headed for oversubscription, but was held to its $600 million hard cap because the firm wanted to remain in its traditional deal segment.
Resource PE funds were also en vogue in 2014. There’s no better example than the oversubscribed second fund of Wateron Global Resource Management, which closed its Waterton Global Precious Metals Fund II this year at just over US$1 billion, or 33 percent more than its target, making it one of the global market’s largest mining funds.
Oil and gas funds also did well, with Annapolis Capital raising $300 million for its seventh fund, which approximates the combined raise of its previous six funds. And KERN Partners reported a strong initial close on its fourth fund, KERN Energy Partners IV, which is set to raise $750 million.
Another major fund event, the close of Borealis Infrastructure’s Global Strategic Investment Alliance (GSIA), spoke to the growing appeal of private infrastructure offerings. Launched in 2012, GSIA this year secured further commitments from Asian and U.S. institutional investors, bringing its final total to US$12.5 billion.
InstarAGF Asset Management also closed Stream Asset Financial, a midstream energy infrastructure fund, while Northleaf Capital Partners pulled in $520 million for its pooled infrastructure platform, Northleaf Infrastructure Co-Investment Partners.
While not all Canadian firms pursue deal opportunities at home, record fundraising this year and last clearly influenced trends in the domestic market. The Canadian Private Equity & Venture Capital Association (CVCA) reported substantial growth in Canadian deal-making in the first nine months, with $26.4 billion in disclosed values, or already more than double the amount in all of 2013.
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