Canada’s top 10 first-half private equity deals had disclosed values of more than $7.8 billion, suggesting market activity in 2016 may be frothier than previously expected.
Both the Canadian Venture Capital and Private Equity Association and Thomson Reuters reported a year-over-year decline in PE investment in the first quarter.
Dollar flows for all deals surpassed the $10-billion-dollar mark at the end of June, preliminary Thomson Reuters data show. That’s up from $7.8 billion in the first half of 2015.
H1 2016’s top deals, led by CDPQ‘s investment in Bombardier‘s rail arm and OMERS Private Equity‘s proposed sale of Give & Go, are a diverse lot. The largest number are in the oil patch, as low energy prices continue to create distress and value opportunities for investors.
(1) Bombardier Transportation investment
In February, Bombardier closed a $2.1 billion (US$1.5 billion) convertible share investment in its rail arm by Caisse de dépôt et placement du Québec. The deal, announced last November, gave CDPQ a 30 percent stake in the business. CDPQ has since said it is open to further investment in Montréal’s Bombardier, which also manufactures planes.
(2) Give & Go sponsor-to-sponsor deal
OMERS Private Equity agreed to sell Give and Go Prepared Foods Corp to Thomas H. Lee Partners in April. Terms weren’t disclosed, but Reuters reported the deal approached $1 billion (US$800 million). Give & Go, a Toronto maker of baked goods, was acquired by OMERS from Kilmer Capital Partners in December 2007.
(3) Teine Energy asset acquisition
Teine Energy, majority-owned by Canada Pension Plan Investment Board, bought oil-weighted assets in southwestern Saskatchewan for $975 million. The seller in the deal, closed in June, was Penn West Petroleum. The acquisition by Calgary-based Tiene is one of several recently undertaken by energy companies backed by CPPIB.
(4) GFL Environmental buy of Matrec Services
Markham, Ontario’s GFL Environmental closed its buy of Matrec Services, a solid-waste business, from TransForce in February. The $800 million deal, announced last October, was backed by a $458 million investment from a number of PE firms, including Macquarie Group and Highbridge Principal Strategies.
(5) RimRock line-of-equity investment
In February, RimRock Oil & Gas secured a line-of-equity investment of as much as US$500 million or about $688 million (exchange rate: 1.38 CAD). The investor was Warburg Pincus, which has major interests in Canada’s energy industry. Calgary-based RimRock was founded in late 2015 by former executives of Talisman Energy (now Repsol Oil & Gas Canada).
(6) Pacific E&P restructuring transaction
Pacific Exploration and Production struck a restructuring deal with Catalyst Capital Group and other debtholders in April. Catalyst agreed to provide half of a US$500 million ($641 million, exchange rate: 1.28 CAD) debtor-in-possession financing. Toronto-based Pacific E&P subsequently received a competing offer from EIG Global Energy Partners, but Catalyst prevailed.
(7) Telus International sale
Telus agreed in May to sell a 35 percent stake in outsourcing-services provider Telus International to Baring Private Equity Asia. The deal, closed in June, valued Telus International at $1.2 billion and awarded its Canadian parent about $600 million in proceeds.
(8) Pozen-Tribute Pharmaceuticals Canada merger
Pozen and Tribute Pharmaceuticals Canada were combined in February, creating Canadian-domiciled Aralez Pharmaceuticals. Aralez commenced public trading shortly thereafter. The merger was supported by financing of about $486 million (US$350 million) from a consortium led by Deerfield Management.
(9) Axia NetMedia take-private acquisition
Axia NetMedia agreed in March to be acquired by Partners Group for $272 million. The deal is expected to wrap up in July and will result in the company’s delisting. Calgary’s Axia, an operator and seller of services over fibre-optic infrastructure, recently said an affiliate has offered to buy France’s Tutor Group.
(10) Boulder Energy take-private deal
Calgary-based oil and gas producer Boulder Energy was taken private in April by an affiliate of ARC Financial Corp for about $268 million, including debt. The deal is one of several new investments made in the first half of 2016 by ARC, which closed its eighth energy fund at $1.5 billion in June 2015.
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