Nortel Sale Boosts Q3 Canadian PE Volume

TORONTO (Reuters) – Canadian private equity buyout firms had their strongest three months of the year in the third quarter, boosted by more deals and the $900 million sale of Nortel Networks Corp’s (NRTLQ.PK) enterprise unit to Avaya Inc.

According to data put out by the Canadian Venture Capital and Private Equity Association (CVCA) and Thomson Reuters on Thursday, there were 28 disclosed, completed and pending transactions in Canada in the third quarter of 2009, down from 40 in the same period a year ago.

Including the acquisition of Nortel’s business unit, the average size of disclosed private equity buyouts in the third quarter was $186.4 million, well above the $73 million average for the first nine months of 2009, but still below the 2008 average deal size of $226.4 million.

Canada’s private equity buyout activity has been hit hard by the global economic crisis, with investors hesitant to commit to ventures until they are sure valuations have stabilized, but industry leaders say the outlook is improving.

“We have come out of the economic slowdown and are able to compete on the global stage,” said CVCA President Greg Smith.

Buyout investment was just over $2.0 billion in Canada in the first nine months of the year, versus $8.5 billion in the first nine months of 2008.

The CVCA said buyout fundraising has been depressed in the first three quarters of 2009. Funds raised totaled only $649 million in the period after three record years in 2006, 2007 and 2008, raising $9.4 billion, $4.5 billion, and $5.6 billion respectively.

“As a result of this strong fundraising in recent years, Canadian funds still have considerable available capital to deploy as compared to funds in other regions,” the CVCA said.

Private equity buyout investment worldwide was $81.3 billion in the first three quarters of 2009.

($1=$1.05 Canadian) (Reporting by Pav Jordan; editing by Rob Wilson)