MONTREAL, Feb. 27, 2014 /CNW Telbec/ - A total of $588 million was invested in Québec's venture capital (VC) market in 2013, up 46% from 2012 and the highest amount since 2007. Dollars invested in the buyout and private equity (PE) market remained at a high level, substantially above those recorded in 2011, 2010 and 2009. These observations are drawn from the 2013 annual report on activity in the VC market and the buyout and PE market in Québec, compiled by Thomson Reuters and released today by Réseau Capital.
Venture capital in Québec reaches its highest level in six years
Investment activity on the North American market was more dynamic in 2013. The Canadian market saw 31% growth with $2 billion in activity, while the U.S. market showed a more modest 7% advance, at $29.4 billion. But the Québec market, with $588 million invested - up 46% - took top spot with its highest level since 2007, the record year in the previous market cycle. Québec transactions accounted for a higher proportion of all dollars invested in Canada, at 30%.
"It is worth noting that U.S. and overseas funds played a decisive role in Québec in 2013, injecting $195 million, which is 84% more than in the previous year," says Jack Chadirdjian, President and CEO, Réseau Capital. "This clearly shows Québec's ability to attract new capital from abroad to support development of our local companies."
The size of VC financing rounds also rose significantly in Québec, going from average investments of $2.7 million per company in 2012 to $3.9 million in 2013. Various companies at later stages of development, such as Enerkem, iBwave Solutions, Distech Controls and Beyond the Rack, contributed heavily to this trend, picking up substantial investments. The non-technology ($208 million) and clean technology ($200 million) sectors were in the forefront of VC investment growth in Québec in 2013, accounting for 36% and 34% respectively of the amounts invested, a trend also seen elsewhere in the country. The information technology and life sciences sectors, meanwhile, lagged in comparison to 2012.
Buyout and private equity market remains vigorous
Despite a 20% decline in the buyout and PE market compared to 2012, an exceptionally active year in Québec, investments totalled $3.6 billion, well above the levels recorded in 2011, 2010 and 2009. Control-stake acquisitions, growth investments and other PE transactions in Québec numbered 120 in 2013, almost the same as in 2012.
"While large-cap transactions remain the market's driving force, in particular with the $1.1-billion investment in ArcelorMittal Mines Canada and $1.1 billion in Atrium Innovations, small and medium-sized enterprises account for nearly two-thirds of transactions, with disclosed values of $10 million or less," Mr. Chadirdjian says, adding: "Although these transactions account for only 7% of all investments recorded in this market, we are seeing a major trend, indicating how important this market is in stimulating and supporting the growth and innovation projects of Québec SMEs."
Québec also accounted for the largest number of Canadian buyout-PE transactions in 2013, at 37%, and it brought in 29% of the dollars invested, behind Ontario, which posted slightly less than half the total. Canadian fundraising activity in buyouts, mezzanine investments and other types of PE transactions broke all earlier records at $16.1 billion, more than triple the $4.9 billion committed in 2012. The previous record year dates back to 2006.
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. Its mission 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.
SOURCE: Réseau Capital
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