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Record Buyout Volume in Canada

It seems like the 2005 drop in Canadian buyout volume was an aberration, based on new data from the CVCA and Thomson Financial. Disclosed values for buyouts of Canadian companies totaled a record US$10.9 billion last year, which is more than double the $4.5 billion tally from 2005. It also is higher than the $6.7 billion raised in 2004.

This Canadian growth is obviously in line with a global increase in buyout volume, which saw a 4x rise for U.S. deals and around a 1.5x rise for non-North American deals. What is perhaps more interesting, however, is that Canadian firms themselves are investing most of their capital outside of the ten provinces. Canadian firms invested a total of $13.4 billion last year, but only $3 billion of that was into local companies. Moreover, the largest increase in capital for Canadian buyouts came from investors outside of North America, as U.S. buyout investment into Canada remained relatively static (up slightly from 2005, down slightly from 2004).

Canadian fundraising also rose last year for both the buyout and mezzanine classes. Local buyout firms raised around Cdn$6.43 billion last year, compared to $1.44 billion the prior year. Mezzanine rose from Cdn$248 million to Cdn$569 million. Venture capital fundraising, on the other hand, dropped from Cdn2.22 billion to Cdn$1.64 billion. VC investing in Canada was flat.