PE deal values in Canada reach C$14bn in first three quarters

Activity in Canada’s private equity market lagged slightly in the first three quarters of 2020, according to final data released by Refinitiv, with C$14 billion disbursed across 314 deals.

Investment activity in Canada’s private equity market lagged slightly in the first three quarters of 2020, according to final data released by Refinitiv, with C$14 billion disbursed across 314 deals. In Q3 alone, C$1.2 billion of values were recorded, down 83 percent year over year and the weakest quarter in dollar terms since Q2 2013. Transaction volumes for the entire nine-month period fell 17 percent from 2019 levels and values dropped 14 percent. Canadian PE investors in this period joined 183 global deals worth C$73 billion, down 27 percent from 2019.

A full PDF report of Q3 2020 Canadian private equity market activity by Refinitiv is available here.

REPORT SUMMARY

Canadian buyout and related investment totaled $14.0 billion of deal values recorded across 314 deals either announced or completed between January and September. This resulted in a year-over-year decline in values of 14% and in volumes of 17% from 2019 levels. The third quarter alone saw just $1.2 billion of deal values across 97 transactions, the weakest quarter since Q2 of 2013.

The only transaction newly added to the top deals list during the third quarter was the $350 million investment into Ontario-based propane distribution business Superior Plus by Brookfield Asset Management. Four deals with values of $1 billion or greater were either announced or completed in the first nine months of the year. These included the $2.0 billion purchase of Ontario-based salt manufacturing business Kissner Milling Company by Stone Canyon Industries, the $1.3 billion acquisition of Competence Call Center by TELUS International backed in part by the 35% stake owned by Baring Private Equity Asia, the $1.0 billion purchase of AltaGas Canada by an investment vehicle backed by pension plans PSP Investments and Alberta Teachers’ Retirement Fund Board, and the $1.0 billion acquisition of aerospace company MDA from Maxar Technologies by a consortium led by Northern Private Capital.

While the number of Canadian buyout deals fell 17% year-over-year, the overall number of Canadian M&A transactions increased 6% to 1838 during the same period following a rebound of activity in the third quarter, resulting in the share of PE-backed deals dropping to 17% of overall Canada dealmaking, down from 22% a year ago.

A total of 15 Canadian buyout and related funds recorded closes in the first three quarters of 2020, reaching commitments of $31.5 billion during the nine month period, more than was raised throughout the full twelve months of any previous year. The majority of this was for Brookfield’s fifth infrastructure fund, which closed in February and achieved total equity commitments of $26.6 billion. Brookfield also completed a $1.4 billion raise in the third quarter for its Super-Core Infrastructure Fund, bringing its total commitments to $3.5 billion, while $466 million was raised by FrontWell Capital for its Private Credit fund, launched in September.

Canadian companies completed 45 PE-backed exits with aggregate disclosed exit values of $15.6 billion, resulting in volumes declining by 13% year-over-year while values doubled. Top exits newly announced in the first nine months of the year included the $10.4 billion sale of Bombardier Transportation to French transportation company Alstom, with Bombardier and Caisse de dépôt et placement du Québec exiting from the business. Other top exits included the previously mentioned $2.0 billion secondary sale of Kissner Milling Company to Stone Canyon Industries with exits by firms Metalmark Capital and Silvertree Capital, and the $1.1 billion IPO of Québec-based payments processing company Nuvei, which had previous backing from Canadian firms Novacap and Caisse de dépôt et placement du Québec.