2020 Year in Review: CVCA Private Equity Canadian Market Overview: Decrease in Megadeals refocuses PE investment on the Mid Market in 2020

PE-backed Exits in 2020 Experience Highest Value of IPOs on Record

TORONTO, March 24, 2021 /CNW/ - The Canadian Venture Capital and Private Equity Association (CVCA) today released its newly redesigned year-end report focused on Canadian private equity. 2020 saw CAD $14B invested across 635 deals. The Canadian PE market has traditionally averaged $21B in yearly PE investment and 2020 was notable in that mega deals accounted for only $3.7B compared to $11.6B in 2019.

The exit market in 2020 saw the highest value of PE-backed IPOs (CAD $13.9B across 4 IPOs) but with the lowest number of exits on record. There were only 35 exits in 2020 which was 57% lower than the 5-year average (82 exits, 2015-2019). In addition to IPOs, other exits include 24 M&A deals totalling CAD $1B, and 6 secondary buy-out deals with CAD $2.7B invested in 2020.

The largest exit in 2020 was Ontario-based waste management company GFL Environmental, listing on TSX in February with a market cap of CAD $7.7B backed by Ontario Teachers' Pension Plan and other investors.

"PE investors are moving forward cautiously amid the ongoing COVID-19 pandemic and are being faced with a bombardment of new variables such as shifts to consumer preferences, digitization, government restrictions, and low-to-zero touch models," said Kim Furlong, Chief Executive Officer, Canadian Venture Capital and Private Equity Association. "It is also interesting that amidst the economic turmoil that COVID-19 has created, the valuation market remains very hot. The valuation factor is what we will be watching most closely in 2021."

2020 experienced an unprecedented rise in the number of debt financing deals, with 260 deals in 2020 compared to the 5-year average of 195 deals (2015-2019), as well as an increase in minority investments compared to the 5-year average. The rise in debt financing deals indicate a shift in investor risk during 2020 when the need for liquidity is heightened in portfolio companies. 2020 also saw an uptick in privatization deals returning to the peak levels experienced in 2017, potentially attributable to the trend of certain sectors opting to de-risk themselves from the volatility of public markets by going private:

• Debt deals comprised 41% of total deal volume, with CAD $1.1B across 260 deals. The average deal size was CAD $4M
• Minority (follow-on and growth) investments comprised 34% of total PE deal volume, with CAD $5.6B across 217 deals. The average deal size was CAD $26M
• Buyout and add-on investments comprised 18% of total deal volume in 2020, with CAD $2.5B across 113 deals. The average deal size was CAD $22.5M
• Secondary buyout deals comprised 0.6% of total deal volume, with CAD $2.7B across 4 deals. The average deal size was CAD $668M
• Privatization deals comprised 1% of total deal volume, with CAD $1.3B across 5 deals. The average deal size was CAD $254M

Access the full Canadian Venture Capital and Private Equity Market Overviews Here.

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A thriving Canadian economy driven by private capital

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CVCA's mission is to help our members fuel the economy of the future by growing the businesses of today. We do this by supporting and connecting a vibrant private capital industry with advocacy, research, and education.  

CVCA is also the nation's ultimate resource for data on Canadian private capital investments. Please visit: http://www.cvca.ca.

SOURCE CVCA - Canada's Venture Capital & Private Equity Association

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