Canadian private equity goes big in 2017 as top deals draw $22 bln

For Canada’s private equity market, 2017 was the most active year in a decade.

While the vast majority of deals were mid-market in nature, the headlines focused on a handful of large-caps. They included last year’s proposed buy of Husky IMS International by Platinum Equity and the completed buy of DH Corp by Vista Equity Partners, the two biggest Canadian PE deals since 2014.

Husky and DH Corp helped Canada’s top 10 private-equity deals in 2017 together account for disclosed values of more than $22 billion. That’s up 88 percent from the $11.7 billion captured by the top 10 deals in 2016.

The number is based on PE Hub Canada’s list of the largest deals announced last year, supplemented by preliminary data from Thomson Reuters. It indicates the domestic market ended a two-year decline in 2017 with especially strong dollar flows.

Preliminary Thomson Reuters data show disclosed dollars invested in a range of established companies reached $32.6 billion last year, almost double the $17.5 billion invested in 2016. If the former statistic holds in the final data cut, 2017 will reflect the most cash-intensive PE deal-making in Canada since 2007.

Notable in the market trends was the comparatively low profile of large oil-and-gas deals. In fact, the energy industry, which in most recent years has taken the largest share of deployments in Canada, finished in 2017 behind finance, manufacturing, consumer and other sectors.

1) Husky sponsor-to-sponsor

In 2017’s biggest deal, OMERS Private Equity and Berkshire Partners agreed to sell Husky IMS International, an injection-molding equipment and services supplier, to Platinum Equity for more than $4.9 billion (US$3.8 billion). It is expected to close in Q2 2018. Bolton, Ontario’s Husky was sold to its current owners by Onex Corp in 2011.

2) DH Corp take-private deal

DH Corp, a Toronto financial-technology services provider, was taken private in mid-year by Vista Equity Partners for about $4.8 billion. Vista reportedly competed with other PE investors for the company, which was ultimately merged with Britain’s Misys. The new mega-entity was named Finastra.

3) SNC-Lavalin buy of WS Atkins

Montréal engineering and construction company SNC-Lavalin acquired WS Atkins, a U.K. design, engineering and project management consultancy business. The deal, valued at $3.6 billion, was backed with $1.9 billion in debt and equity financing from Caisse de dépôt et placement du Québec.

4) RBI acquisition of Popeyes

Restaurant Brands International, owner of fast-food chains Burger King and Tim Hortons, bought New Orleans-founded Popeyes Louisiana Kitchen for about $2.4 billion (US$1.8 billion). Oakville, Ontario’s RBI was created in 2014, when 3G Capital-backed Burger King acquired Tim Hortons for $12.6 billion.

5) Milestone take-private deal

Milestone Apartments REIT, an owner and operator of U.S. residential properties that listed in Toronto in 2013, was taken private by Starwood Capital Group for about $1.7 billion (US$1.3 billion). Following a slight increase in the original offering price, the deal was closed in the spring.

6) Osisko precious-metals portfolio buy

Osisko Gold Royalties acquired a precious-metals portfolio from Orion Mine Finance for more than $1.1 billion. Caisse de dépôt et placement du Québec and Fonds de solidarité FTQ funded about 41 percent of the $675 million cash payment. Later in the year, PSP Investments agreed to invest $100 million in Montréal’s Osisko.

7) Arctic Glacier sponsor-to-sponsor

Carlyle Group bought Arctic Glacier Holdings, a Winnipeg maker and distributor of packaged ice, from HIG Capital, which acquired it out of bankruptcy in 2012. No financial terms were disclosed, but Moody’s reported the purchase price at about $966 million (US$723 million).

8) Teekay Offshore stake acquisition

The private equity group of Brookfield Asset Management acquired 60 percent of Teekay Offshore Partners, an affiliate of Vancouver marine energy transportation, storage and production company Teekay Corp. Brookfield paid about $938 million (US$750 million) for the majority interest.

9) Canam take-private deal

Canam Group, a Saint-Georges, Québec, maker of customized construction products, was taken private by American Industrial Partners and members of the Dutil family. The roughly $875 million deal was joined by Caisse de dépôt et placement du Québec and Fonds de solidarité FTQ, Canam’s existing shareholders.

10) Centrica oil and gas assets sale

A consortium led by MIE Holdings and including Can-China Global Resources Fund and Mercuria bought CQ Energy Canada Partnership for about $722 million (£413 million). The target, a Calgary business holding oil and gas producing, resource and infrastructure assets, was sold by Britain’s Centrica.

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