Activity in the Québec buyout and private equity market in 2012 - Totalling $4.4 billion, the market posts an exceptionally high volume of transactions, beating the 2007 record
MONTREAL, Feb. 19, 2013 /CNW Telbec/ - Réseau Capital today released its second annual review of the buyout and private equity market in Québec, prepared by Thomson Reuters. This report presents a picture of investment fund activity in the market, which is vital to the financing of established Québec companies. Buyouts and private equity consist primarily of corporate acquisitions with majority stakes, investments with minority ownership to finance the growth of companies, enabling them to make acquisitions or achieve recovery and, finally, mezzanine debt, or quasi-equity investment.
In 2012, the Québec buyout and private equity (PE) market had an outstanding year, with a disclosed value of transactions totalling $4.4 billion, up sharply from the $1.4 billion reported in 2011. Overall, 112 transactions1 were recorded in 2012, 24% more than in the previous year and exceeding the record set in 2008. This major increase is due in particular to mega-transactions surpassing $1 billion, including the year's largest, involving the privatization of Montréal-based Garda World Security Corp., acquired by the British company Apax Partners ($1.1 billion) and the investment by the Caisse de dépôt et placement du Québec in Montréal-based CGI Group Inc. ($1.0 billion). The Garda deal was the biggest recorded since 2007.
"With the Garda and CGI Group transactions, it's obvious that buyout-PE activity in Québec was heavily focused on investments of $100 million or more, accounting for 75% of the 2012 investment total," says Jack Chadirdjian, President and Chief Executive Officer of Réseau Capital. "Québec also stood out on the Canadian scene compared to 2011, holding a dominant place in key indicators, with 36% of transactions and 38% in dollar terms."
Leading areas of activity
The information and media sectors posted the lion's share of disclosed investment, at 31% (due largely to the CGI Group transaction), while transportation and financial services had shares of 25% and 10% respectively. Manufacturing and processing companies accounted for nearly a quarter of all transactions, followed by the retail and information and media sectors, at 19% and 11% respectively.
Transactions with minority stakes continued to predominate in terms of activity in 2012, with 45% of the total number of deals, but acquisitions with majority ownership had a 39% share in dollar terms (due in particular to the Garda privatization).
In the areas of fundraising by buyout, mezzanine and other PE funds, activity increased by 24%, bringing in $4.6 billion in new capital.
"The buyout and private equity market was not well documented in the past," Mr. Chadirdjian concludes. "We hope the type of report we are issuing today can make this capital contribution better known. This market adds directly to the growth of our companies in Québec and stimulates our economy."
About Réseau Capital
Réseau Capital, founded in 1989, is the only private-equity association that brings together all stakeholders involved in the Québec investment chain. The mission of Réseau Capital is to contribute to the development and efficient operation of the private-equity industry, which plays a major role in the development and financing of businesses in Québec. Réseau Capital has more than 425 members representing private-equity, tax-advantaged and public investment companies, as well as banks and insurance companies, accounting and law firms, angel investors, and many professionals working in the field.
1 Of the 112 transactions conducted in Québec in 2012, the dollar value was disclosed to Thomson Reuters in 88% of cases.
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