Deal-making activity in Canada’s buyout and related private equity market showed a marked decline in the first nine months of 2016, according to data released by Thomson Reuters. Disclosed values of transactions (announced and completed) totaled $14.3 billion as of September 30th, down 26 percent from the same time last year. Additionally, a total of 229 deals was done in the first nine months, the fewest in that period since 2010. Canadian oil and gas companies continue to drive 2016 activity, with 38 deals so far collecting $3.6 billion. Fundraising remained strong as of September 30th, with $42.9 billion in total new commitments.
A full PDF report of Q3 2016 Canadian buyout and related private equity market activity by Thomson Reuters is available here.
REPORT SUMMARY (reproduced courtesy of Thomson Reuters)
Canadian buyout-PE market trends
Deal-making activity in Canada’s buyout and related private equity (PE) market showed a marked decline in the first nine months of 2016. Disclosed values of transactions (announced and completed) totaled $14.3 billion as of September 30th, down 26% in dollar terms from the year prior. A total of 229 deals were done in the first three quarters, the fewest deals in that period since 2010.
Top deals included CDP Capital’s $2.0 billion investment in Bombardier Transportation, Thoma Bravo’s $1.6 billion investment in Trader Corporation, and CPPIB’s $1.5 billion investment in Oxford Properties Group. As of the end of September, the four largest transactions sized $1 billion or greater captured 44% of all disclosed disbursements made in the Canadian market.
In addition to a decline in private equity investment in Canadian companies on a year-over-year basis, investment activity also continues to decline as compared to Canadian merger & acquisition activity overall. While the number of private equity deals reached a peak of 28% of the number of traditional merger & acquisition deals in 2015, this declined to only 21% in the first three quarters of 2016, a share not seen since 2013.
Canadian market trends by sector
Canadian oil & gas companies accounted for the largest share of buyout-PE deal-making so far this year with 38 transactions from January to September, or 17% of the national total. Manufacturing and mining companies followed in second and third place respectively with 30 and 27 deals in the first nine months.
As measured by disclosed deal values, oil & gas and manufacturing companies continued to lead all other industries, with $3.6 and $3.4 billion of investment respectively.
Canadian market trends by region
The decline in deal volumes was felt across Canada in the year to date; no province or region secured more deals in the first nine months of 2016 than it had in the same period the year prior. Ontario saw its deal count fall the most, from 96 to 63, a 36% decrease. Buoyed by continuing oil & gas dealmaking, Alberta saw the smallest decline in deal volumes, at only 5% below levels seen in the first nine months of 2015.
Though the number of deals done in Ontario declined the most so far this year, the province did attract the bulk of the largest deals, securing $7.1 billion. Alberta and Québec followed second and third, with $3.3 billion and $3.0 billion of disclosed investment respectively.
Canadian investor activity in global markets
Canadian buyout and related PE funds were substantially less active in international transactions in the first nine months relative to the year before. As of September 30th, Canadian funds led or participated in a total of 83 deals, collectively totaling $70 billion, including Canadian and non-Canadian investors. While this was far below the 109 deals collectively totalling $108 billion in the first 9 months of 2015, it still represents the second strongest year-to-date on record for Canadian PE funds investing abroad. Topping the list were two acquisitions of Australian transportation companies, OMERS $9.6 billion investment in Port of Melbourne Corporation, and CPPIB’s $9.1 billion investment in Asciano.
Trends in Canadian buyout-PE fund-raising
The fundraising activities of Canadian buyout funds maintained very strong levels in the first nine months of 2016 with a total of $42.9 billion of new capital committed, substantially accounted for by the closings of Brookfield Infrastructure Fund III, Brookfield Strategic Real Estate Partners II, and Brookfield Capital Partners IV.
Photo courtesy of Reuters/Mark Blinch