Canadian private equity in Q1 sees lower values, more deals

Canada’s buyout and private equity market in Q1 2021 saw a drop in values but a rise in volumes, with C$6 billion deployed to 145 deals.

Canada’s buyout and private equity market in Q1 2021 saw a drop in values but a rise in volumes, with C$6 billion deployed to 145 deals, according to final data released by Refinitiv. The level of transactional activity was up 8 percent from Q1 2020 and marked the most active first quarter since 2012. Values, however, fell 25 percent year over year. Canadian PE investors joined 91 cross-border deals worth C$19.5 billion between January and March, down 12 percent in dollar terms from a year earlier.

 A full PDF report of the Q1 2021 Canadian buyout and private equity market activity by Refinitiv is available here.

REPORT SUMMARY

Canada buyout and related deal values total $6.0 billion

Canadian buyout and related investment totaled $6.0 billion of deal values recorded across 145 deals either announced or completed throughout the first three months of the year. This resulted in a year-over-year decline in values of 25%, but an increase in volumes of 8% from Q1 2020 levels. The average size of disclosed transactions was $82.0 million, down 30% from the $116.8 million in Q1 2020.

The top ten transactions for the quarter brought in $5.4 billion of deal values, 90% of the total for the period. Topping the list was the $2.8 billion acquisition of the Canadian operations of energy business Enwave by Ontario Teachers’ Pension Plan Board and IFM Investors, announced in February and expected to be completed mid-year. New Look Vision Group, a Quebec-based provider of eye care products and services, announced an agreement to be acquired by an investment vehicle backed by FFL Partners, Caisse de dépôt et placement du Québec, and the Dr. H. Doug Barnes Family. Rounding out the top three was the merger between Ontario-based lithium-ion battery recycling business, Li-Cycle, and blank check company Peridot Acquisition, which will provide the business with additional funding of $777 million including $398 million of equity from a PIPE backed by Neuberger Berman, Franklin Templeton, Mubadala Capital, Carnelian Energy Capital, Moore Strategic Ventures, and Traxys.

While the number of Canadian buyout deals increased 8% year-over-year, the overall number of Canadian M&A transactions increased 48% to 821 during the same period following a sharp rebound of activity from the beginning of 2020. This resulted in the share of PE-backed deals declining to 18% of overall Canada dealmaking, down from 24% in Q1 2020 but still in line with the 18% share throughout the entirety of 2020.

A total of six Canadian buyout and related funds recorded closes in Q1 2021, with total commitments of $3.1 billion. This was down 89% from the massive record-breaking first quarter of 2020, but still remained the second strongest first three month period in the previous decade. The top fundraise for the period was the $2.4 billion close of Novacap’s oversubscribed TMT VI fund, the firm’s largest ever.

Canadian companies completed 23 PE-backed exits with aggregate disclosed exit values of $18.6 billion in the quarter, resulting in volumes increasing by 5% and values by 414%. The top exit completed was the $10.9 billion sale of Bombardier Transportation to French transportation company Alstom, with Bombardier and Caisse de dépôt et placement du Québec exiting from the business. Newly announced in the first quarter was the previously mentioned $2.8 billion secondary sale of Enwave’s Canadian business by Brookfield Infrastructure to Ontario Teachers’ Pension Plan Board and IFM Investors.