TORONTO, May 26, 2011 /CNW/ - What a difference a year makes. In 2009,
the PE industry seemed to have hit bottom. In 2010, the worst seemed to
be over, and now the story is all about recovery and revival.
Although fundraising has remained challenging, private equity is on the
rise. Buyout deal volume is increasing. LPs are indicating a strong
desire to recommit or up their commitments to the asset class.
Blackstone shares have recovered significantly from their lows, and
Apollo undertook an IPO of its business in March 2011 to successfully
raise $565 million.
According to the 10th annual PE report just released by McKinsey & Company, what makes this
rebound different from those of the past is how LPs are thinking about
and adapting their approach to private equity as an asset class - and
how GPs will need to adapt accordingly. McKinsey thinks three trends
will shape the LP-GP relationship, and thus the market:
The unprecedented amounts of capital flowing into the PE and other
alternative asset classes
The decline of performance persistence, which is resulting in LPs
developing more robust GP selection and management processes and
building organizations to support them
A clearer bifurcation in GP strategies and approaches to working with
Private Equity Canada 2010 examines each of these trends, identifying the implications for LPs and
GPs and highlighting the elements that they are likely to incorporate
into their strategies.
The report also provides an in-depth review of Canada's PE market over
the past year. Prepared by Thomson Reuters for McKinsey, it describes
key trends in the different PE segments and compares market growth
rates, the creation of new partnerships, and domestic and global deal
activity to prior years.
Additional Private Equity Canada 2010 highlights include:
In 2010, Canadian PE deal-making increased across the spectrum for the
first time in 3 years. Investment levels in the Canadian market grew
moderately year over year, while Canadian PE funds had unprecedented
influence in shaping market trends on a global basis.
Capital managed by Canadian PE funds totaled $84.9 billion in 2010, up
12 percent from 2009.
Buyout and related PE funds absorbed most new dollars in 2010. Canadian
fund managers oversaw $63.4 billion, up 18 percent from 2009,
accounting for 75 percent of the entire market.
Mezzanine and other quasi-equity fund managers oversaw $6.6 billion,
down from 2009, and comprising 8 percent of the aggregate amount.
Venture capital fund managers oversaw $14.9 billion, almost unchanged
from 2009, and making up 17 percent of the overall pool.
Disbursements by Canadian buyout, mezzanine, and other PE funds totaled
$7.4 billion, up 120 percent from 2009. In addition, deals done in
domestic and foreign businesses totaled 369, up 18 percent over the
Canadian VC funds invested approximately $1 billion in domestic and
foreign businesses, up 16 percent from 2009. Company financings also
increased 11 percent year over year, totaling 454.
The report's conclusions are drawn from McKinsey's proprietary research
and the data Thomson Reuters collected and analyzed from its annual
proprietary survey and supplemented with several related surveys and
interviews. The 2010 survey was consistent with the 2009 one - and
those of previous years - permitting year-over-year comparisons. The
123 survey respondents represented all of the largest investor groups
based in Canada and 97 percent of the entire capital pool.
About McKinsey & Company
McKinsey & Company is a management consulting firm that helps the
world's leading corporations and organizations address their strategic
opportunities and challenges. For over 80 years, the firm's primary
objective has been to serve as an organization's most trusted external
advisor on critical issues facing senior management.
About Thomson Reuters
Thomson Reuters is the authoritative source of information on activity
in Canada's private equity market. Its extensive network of contacts
and its proprietary data sources have made the firm a focal point for
information on Canadian private equity deals and deal-makers. For this
reason, Thomson Reuters is a vital, value-adding resource for
understanding the full universe of market players in Canada, as well as
those based in the United States and other countries that are engaged
in cross-border investing.
For further information:
To obtain a copy of Private Equity Canada 2010, visit www.mckinsey.com/privateequitycanada or www.thomsonreuters.com, or www.canadavc.com. To request an interview, contact: Robert Palter at 416 313 3774 or firstname.lastname@example.org; Sacha Ghai at 416 313 3834 or email@example.com; Jonathan Tétrault at 514 939 6925 or firstname.lastname@example.org; or Kirk Falconer at 613 747 4441 or email@example.com.