Canada's Buyout & Private Equity Market in 2012: Dollar Flows Total $11.6B, Deal Volume Highest On Record

TORONTO, Feb. 19, 2013 /CNW/ - With $11.6 billion of new investments via 313 transactions buyout and related private equity (PE) market activity in Canada set records for activity and demonstrated the highest investment level since 2008.  These were among the findings of a statistical report released today by CVCA- Canada's Venture Capital & Private Equity Association and research partner Thomson Reuters.

According to the data, disclosed buyout and private equity disbursements totaled $11.6 billion in 2012, just edging out the $11.5 billion reported in 2011, and marking the highest level of dollars invested in the Canadian market since 2008.  PE transactions totaled 313 in 2012 which was up 4% from 2011, establishing a new market record. Key to Canadian market activity in 2012 were a number of mega-deals (i.e., over $1 billion).  These included, Montréal's Garda World Security Corp., which was taken private by British buyout firm Apax Partners for $1.1 billion, and Toronto's Q9 Networks Inc., which was acquired by BCE Inc., Teachers' Private Capital, Madison Dearborn Partners and Providence Equity Partners, also for $1.1 billion.  Despite the high profile of mega-deals, the results for the year revealed that it was transactions sized between $100 and $500 million that took the largest share of total dollars invested (44%) in 2012.  Larger-caps of more than $500 million accounted for a 32% share of capital deployed and while deals under $100 million only 14% of the total capital deployed they did account for the majority of transactions.

"Private equity investment activity in Canada in 2012 continued the upward trajectory it has enjoyed since the market's renewal in 2010. In addition to the high-profile mega-acquisitions which drove the dollar flows, we saw record levels of mid-market investment, which plays a vital role in spurring Canadian business investment, expansion and employment creation," noted Peter van der Velden, President of the CVCA and Managing General Partner of Lumira Capital Corp."

The year end results also revealed that Canadian buyout-PE funds were more active deal-makers on an international basis in 2012.  Domestic investors led or participated in a total of 71 global transactions last year, up 36% vs 2011 while the disclosed values of these deals totaled $28 billion, which was up 56% year over year. The fourth quarter of 2012 proved to be the most active period for Canadian activity abroad, with 25 deals being done and $13.7 billion invested.  Contributing to this trend were the final closes of the US$6.6 billion acquisition of SuddenLink Communications Inc. of St. Louis, Missouri by BC Partners and CPP Investment Board and the US$2.3 billion acquisition of USI Insurance Services LLC of New York, New York by Onex Corp.

"Canadian large-cap and mid-cap funds continued to make their mark globally in 2012 - especially in the year's final quarter," observed Mr. van der Velden.   "They have increased the breadth and depth of their deal-making, moving beyond their traditional emphasis on value opportunities in the United States to include more opportunities in Europe, Asia and other regions. In so doing, Canadian funds are helping to expand and reshape the contours of markets abroad."

In terms of realizations, 2012 showed significant improvement for buyout-PE funds.  With 77 realizations reported at end of December, liquidity events were up 20% from 2011, and up 3% from 2010, which was a record year for exit activity. Strategic sales accounted for 70% of total exits last year, followed by financial acquisitions, which accounted for 16%.

Finally, even in a challenging fund-raising environment of 2012, new capital commitments to Canadian buyout, mezzanine and other PE funds also experienced growth.  New capital totaling $4.6 billion was committed to 23 domestic funds, up 24% from 2011.

"The PE sector really enjoyed an outstanding year in all facets of the business. Investment activity increased, realizations improved and fund raising was strong. This is truly good news for our economy as deal-making of such scope and variety is a testament to the role of private equity is helping multiple businesses in Canada achieve their growth objectives, enhance their productivity levels, and manage complex competitive transitions". said Mr. van der Velden."

Thomson Reuters

Thomson Reuters is the world's leading source of intelligent information for businesses and professionals.  They combine industry expertise with innovative technology to deliver critical information to leading decision makers in the financial, legal, tax and accounting, scientific, healthcare and media markets, powered by the world's most trusted news organization. With headquarters in New York and major operations in London and Eagan, Minnesota, Thomson Reuters employs more than 50,000 people in 93 countries.  www.thomsonreuters.com.

CVCA

The CVCA - Canada's Venture Capital & Private Equity Association, was founded in 1974 and is the association that represents Canada's venture capital and private equity industry. Its over 1900 members are firms and organizations which manage the majority of Canada's pools of capital designated to be committed to venture capital and private equity investments.  The CVCA fosters professional development, networking, communication, research and education within the venture capital and private equity sector and represents the industry in public policy matters. www.cvca.ca

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

To arrange an interview with Peter van der Velden, President of the CVCA and Managing General Partner of Lumira Capital Corp, or Richard Rémillard, CVCA's Executive Director, please contact Lauren Linton, Director of Marketing, [email protected].