private equity canadian market overview // …...private equity canadian market overview // ytd q3...

PRIVATE EQUITY CANADIAN MARKET OVERVIEW

// YTD Q3 2019

PRIVATE EQUITY CANADIAN MARKET OVERVIEW // YTD Q3 2019 | 2

CONTENTS

PARTICIPATING DATA CONTRIBUTORS .......................................................................3 FOREWORD ......................................................................................................................4 PRIVATE EQUITY HIGHLIGHTS ......................................................................................5 DATA VISUALIZATIONS ...................................................................................................6 PRIVATE EQUITY HEAT MAP // BUYOUT & ADD-ON DEALS ONLY ............................................... 6 PRIVATE EQUITY HEAT MAP // PE GROWTH DEALS ONLY ............................................................. 7 PRIVATE EQUITY HEAT MAP // ALL PE DEALS .................................................................................... 8 QUARTER-OVER-QUARTER PE INVESTMENT ACTIVITY .................................................................. 9 TOP 10 DISCLOSED CANADIAN PE DEALS ........................................................................................ 10 PE ACTIVITY BY DEAL SIZE ...................................................................................................................... 11 TOP 10 CANADIAN CITIES // ADMINISTRATIVE CENTRES .............................................................. 12 PE SECTOR BREAKDOWN ....................................................................................................................... 13 PE EXITS ........................................................................................................................................................ 14 TOP DISCLOSED CANADIAN PE EXITS ............................................................................................... 15MOST ACTIVE PE INVESTORS ................................................................................................................ 16

PRIVATE EQUITY METHODOLOGY ............................................................................. 17 AUTHORS, ABOUT CVCA AND CONTACT INFO ..................................................... 19


If you would like to have your firm included in future reports, please contact [email protected]

CVCA thanks the following firms who participated in its Q3 2019 survey.

PARTICIPATING DATA CONTRIBUTORS

7 Gate Ventures

Accelerate Fund

Amorchem Venture Fund

Anges Quebec

Anges Quebec Capital

Arctern Ventures

AVAC Ltd.

Avrio Ventures Management Corp

Azure Capital Partners

BCF Ventures

Bioindustrial Innovation Canada

Build Ventures

CIBC Innovation Banking

CIC Capital Ventures

Conexus Venture Capital

CTI Life Sciences

Cycle Capital Management/EcoFuel

Emerald Technology Ventures

EnerTech Capital

Espresso Capital Ltd.

Evok Innovations

Ferst Capital

Fight Against Cancer

Innovation Trust

First Ascent Ventures

Fonds Innovexport

Freycinet Ventures

Golden Ventures

Good News Ventures

GreenSoil Investments

iGan Partners

Information Venture Partners

Innovacorp

inovia Capital

Island Capital Partners

Luge Capital

Lumira Ventures

MaRS Catalyst Fund

MaRS IAF

McRock Capital

Mistral VP

New Brunswick Innovation Foundation

Panache Ventures

Pangaea Ventures

Pelorus Venture Capital Ltd.

Quantius

Quark Venture

Radical Ventures

Real Ventures

Relay Ventures

Renewal Funds

Ripple Ventures

Rhino Ventures

Roadmap Capital

Round13

Ryerson Futures

ScaleUP Ventures

StandUp Ventures

Tandem Expansion

TandemLaunch

TELUS Ventures

Top Renergy

Trellis Capital

V3-Ventures

Vanedge Capital Partners

Venbridge Ltd.

VentureLink Funds

Versant Ventures

Version One Ventures

White Star Capital

Whitecap Venture Partners

Venture Capital Firms32 Degrees Capital

AIP Private Capital

ARC Financial

Ardenton Capital Corporation

BDC Growth Equity

BDC GTC

BMO Bank of Montreal PE Growth

CAI Capital Management Co.

Canadian Business Growth Fund

Capital Financière Agricole

Clairvest Group Inc.

Clearspring Capital Partners

First West Capital

Founders Group of Food Companies Inc.

Fulcrum Capital Partners

Highland West Capital

InstarAGF Asset Management

Ironbridge Equity Partners

Kayne Capital

Killick Capital Inc.

Lex Capital Management

m2s Capital

Mink Capital

Mosaic Capital Corporation

Novacap Management Inc.

PenderFund Capital Management

Persistence Capital Partners

PFM Capital Inc

PRIVEQ Capital Funds

Roynat Capital Inc.

Seafort Capital

Searchlight Capital Partners

TIMIA Capital Corp

TriWest Capital Partners

Vistara Capital Partners

Westcap Mgt. Ltd

Western Investment Company of Canada Limited

Private Equity & LSVCC FirmsAlberta Enterprise Corporation

Alberta Teachers’ Retirement Fund (ATRF)

BDC Capital Inc

Bluesky Equities

BMO Bank of Montreal (BMO Capital Partners)

Caisse de dépôt et placement du Québec (CDPQ)

Dancap Private Equity Inc

Desjardins Capital

Fondaction CSN

Fonds de solidarité FTQ

Fonds de solidarité FTQ (Regional)

HarbourVest Partners (Canada) Ltd

Investissement Quebec

Kensington Capital Partners Limited

Northleaf Capital Partners

Ontario Teachers’ Pension Plan (OTPP)

Teralys Capital

Limited Partners

25% of all PE deals had undisclosed amounts


FOREWORD

Canadian Private Equity Investment Continues Downward Trend

CAD $1.8B was invested over 94 deals in the third quarter of 2019. The majority of PE activity at 66% remains in the mid market, with deals

of CAD $25M and under. There has been one single CAD $1.4B mega-deal (CAD $1B+) so far in 2019 and one deal at CAD $653M with the remainder of PE deals (with disclosed values) below CAD $500M. The largest disclosed private equity deals included:The $1.4B mega-buyout by Thomas Bravo LLC of privately held London-

based Autodata Solutions Inc.;The $653M recapitalization of Montérégie-based McInnis Cement Inc.

by Caisse de dépôt et placement du Québec (CDPQ); andThe $445M acquisition of Toronto-based Gluskin Sheff + Associates Inc.

by ONEX Corporation.“While the middle market remains traditionally strong for Canadian PE, the

valuation climate continues to be apparent in performance numbers,” said Kim Furlong, Chief Executive Officer, Canadian Venture Capital and Private

Equity Association. “We are, however, noticing an underwhelming public market environment and an increase of companies being taken private (such as WestJet and HBC). These conditions are providing opportunities for public companies to refocus on business imperatives.”

A record proportion of deal flow (25%) went into companies in the industrial and manufacturing sector – three per cent higher than 2017 and five per cent higher than last year. The information and communications technology (ICT) sector maintained its pace with a 17% share.

The pace of PE exits also slowed with only 23 exits (all M&A) which totaled CAD $1.1B. By comparison, there were 87 exits totaling CAD $12.2B in 2018. Included in the 23 exits so far this year:The $753M corporate acquisition of Toronto-based Intelex Technologies

Inc. from HarbourVest Partners, LLC and JMI Equity; andThe $260M acquisition of Langley-based 4Refuel Canada LP by

Finning International Inc.

Public market volatility pushing companies private


PRIVATE EQUITY HIGHLIGHTS // YTD Q3 2019

Key Findings

$1.8B was invested over 94 deals in the third quarter of 2019, 32% lower than the amount invested in the previous quarter and 8% lower than the same quarter from last year

The average YTD deal size ($19.4M) was 46% lower than the average deal size in the previous 3-year period between 2016-2018 ($35.7M)

With the exception of a single $1.4B mega-deal and one $653M deal all other deals with disclosed values were below $500M with 66% (254 out of 385) of them under $25M

The largest disclosed PE deals included: $1.4B mega-buyout by Thomas Bravo LLC of privately held London-

based Autodata Solutions Inc. $653M recapitalization of Montérégie-based McInnis Cement Inc.

by Caisse de dépôt et placement du Québec (CDPQ) $445M acquisition of Toronto-based Gluskin Sheff + Associates Inc.

by ONEX CorporationThree-out-of-every-five PE deals were in the province of Quebec totalling

$3.1B; Ontario captured a fifth of deal flow totalling $2.6B

26% of YTD deal flow involved buyouts totalling $2.4B with Ontario-based companies garnering the largest share at 37% ($2B)

There were 65 deals in Montreal-based companies (17%) totalling $1.6B, followed by Toronto-based companies which captured a 11% share with 42 deals worth $916M

A record share of deal flow (25%) went into companies in the Industrial & Manufacturing sector, 3 percentage points higher than its share in 2017 and 5 percentage points higher than its 2018 share; the ICT sector maintained a 17% share

4 out of every 10 deals were debt deals with an average deal size of $6M which is 23% lower than last year

The pace of PE exits slowed with only 23 M&A exits (totalling $1.1B) compared to 87 exits last year (totaling $12.2B). These included:

The $753M corporate acquisition of Toronto-based Intelex Technologies Inc. from HarbourVest Partners, LLC and JMI Equity

The $260M acquisition of Langley-based 4Refuel Canada LP by Finning International Inc.


2012

$6MAlberta na

Saskatchewan naManitoba

naNew Brunswick

$2bOntario

$117mQuébec

$273MBC

261 3

238

$2.4Btotal 102 deals

PRIVATE EQUITY HEAT MAP BUYOUT & ADD-ON DEALS ONLY // YTD Q3 2019

total #


447

5

2

$6MSaskatchewan

$119MAlberta

$173MBC

$295MOntario

$885mQuébec

$16mPrince Edward

Island

1

15

$1.5btotal 74 deals

PRIVATE EQUITY HEAT MAP PE GROWTH DEALS ONLY // YTD Q3 2019

total #


4

2

233

72$531MBC $200M

Alberta $9MSaskatchewan $3M

Manitoba

$2.6bOntario

$3.1bQuébec

naNew Brunswick

$16mPrince Edward

Island

17

2343

$6.5btotal

385 dealstotal #

PRIVATE EQUITY HEAT MAP ALL PE DEALS // YTD Q3 2019


QUARTER-OVER-QUARTER PE INVESTMENT ACTIVITY

TOTAL:425 DEALS

$22.9B

TOTAL:542 DEALS

$13.8B

TOTAL:609 DEALS

$26.3B

TOTAL:592 DEALS

$22.7B

TOTAL:385 DEALS

$6.5B

20162015 2017 2018

$0

$3,000

$4,500

$1,500

$6,000

$9,000

$13,500

$7,500

$12,000

$10,500

$15,000

0

20

40

60

80

100

120

140

160

180

200

Q4Q3Q2Q1 Q2Q1 Q3 Q4 Q2Q1 Q3 Q4 Q1 Q2 Q3 Q4

$7,0

53

$1,8

69

$11,3

75

$2,5

52

$3,2

21

$3,3

70

91

104117

113

124

146

133

139

$3,0

38

$4,17

9

$5,3

29

114

178165

152 157

163

124 130

161148

$8,7

80

$7,5

49

$4,6

72

$6,7

65

$8,0

64

Q3

94

$1,9

79

$5,8

72

Q1

$1,9

65

Q2

$2,6

70

$1,8

25

$ Millions Invested # Deals

2019


TOP 10 DISCLOSED CANADIAN PE DEALS // YTD Q3 2019

company name province firms involved in transaction sector $ mil

AUTODATA SOLUTIONS, INC ONTARIO THOMA BRAVO, LLC ICT $1,350

MCINNIS CEMENT INC. QUÉBEC CAISSE DE DÉPÔT ET PLACEMENT DU QUÉBEC (CDPQ) INDUSTRIAL & MANUFACTURING $653

GLUSKIN SHEFF + ASSOCIATES INC. ONTARIO ONEX CORPORATION FINANCIAL $445

MINERAI DE FER QUEBEC / QUEBEC IRON ORE QUÉBEC CAISSE DE DÉPÔT ET PLACEMENT DU QUÉBEC (CDPQ) MINING & RESOURCES $385

GROUPE JLD QUÉBEC BDC CAPITAL INC., FONDACTION CSN, FONDS DE SOLIDARITÉ FTQ INDUSTRIAL & MANUFACTURING $103

GOODLIFE FITNESS CENTERS, INC. ONTARIO PENFUND INC. CONSUMER & RETAIL $100

PDFTRON SYSTEMS, INC. BC SILVERSMITH CAPITAL PARTNERS ICT $95

STEEL REEF I NFRASTRUCTURE CORP. ALBERTA INSTARAGF ASSET MANAGEMENT INC., PFM CAPITAL INC. OIL & GAS, POWER $91

123 DENTIST LTD. BC PELOTON CAPITAL MANAGEMENT LIFE SCIENCES $75

ESENTIRE, INC. ONTARIO EDISON PARTNERS, GEORGIAN PARTNERS INC., WARBURG PINCUS LLC ICT $63

There were 11 undisclosed deals totalling $1.5B that were not included in this table


PE ACTIVITY BY DEAL SIZE // YTD Q3 2019

0

40

80

120

160

200

240

280

320

400

360

$0

$16,000

$1,600

$3,200

$4,800

$6,400

$8,000

$9,600

$11,200

$12,800

$14,400

20162015 20162015 20162015 2015

$91

0

$1,2

90

$6,

321

$3,

212

$5,

861

$3,

106 $

4,79

7

2016

$7,

630

$50

9

$65

3

20162015 20162015

$4,

782

$4,

034

$3,

250

$1,6

27

$1,3

50

$3,

300

$4,

800

201720172017201720172017

183

362

56 4936

3114 7 114

193 3 2 1 0 01 1 3

$2,

739

$2,

167

$3,

305

$1,4

85

2018 YTD Q3 2019

YTD Q3 2019

YTD Q3 2019

YTD Q3 2019

YTD Q3 2019

YTD Q3 2019

364

399

254

66

23 828

2018

$1,7

69

2018

$4,

093

2018 2018 2018

$12

,749

$1,9

33

$1,0

65

$1,3

31

$2,

062

1 11

< $25M $100M - $500M $1B - $2.5B$25M - $100M $500M - $1B $2.5B+

$ Millions Invested # Deals


TOP 10 CANADIAN CITIES ADMINISTRATIVE CENTRES // YTD Q3 2019

Total Deals $ Millions

1. Montreal

2. Toronto

3. Québec

4. Montérégie

5. Saguenay-Lac-St-Jean/Côte-Nord

6. Vancouver

7. Calgary

8. Chaudière-Appalaches

9. Laval

10. Bas-Saint-Laurent

65

42

24

23

21

20

19

14

13

13

$1,576

$916

$89

$818

$66

$153

$195

$41

$252

$58

#1 montréal $1.6b 65 DEALS

2

76

1 94

810 53


PE SECTOR BREAKDOWN // YTD Q3 2019

95

66

46

41

35

19

18

16

13

13

12

6

5

# Deals $ Millions

Industrial & Manufacturing

ICT

Consumer & Retail

Agri-Forestry

Business Products & Services

Life Sciences

Automotive & Transportation

Financial

Mining & Resources

Oil & Gas, Power

CleanTech

Real Estate

Others

$1,181

$2,555

$763

$275

$244

$204

$63

$448

$493

$143

$50

$33

$9

most active sectorindustrial & manufacturing

95 deals


PE EXITS // 2015–YTD Q3 2019

0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

0

10

20

30

40

50

60

70

80

90

100

110

120

130

140

20162015 20162015 20162015

$1,7

11

201720172017

$3,7

10

2018 YTDQ3 2019

YTDQ3 2019

$12,

812

$7,0

17

$2,7

90

61 4

5

50

60

23

137

7 4 8

10 0

2018 2018 YTDQ3 2019

82

$8,4

64

$2,16

1

$3,4

08

$1,6

72

$4,8

00

$2,5

53

$1,12

9

$11

IPO/RTO** M&A* SECONDARY BUYOUT*

* includes transactions with undisclosed values ** IPO valuationExit Value ($ Millions) # Exits


TOP DISCLOSED CANADIAN PE EXITS // YTD Q3 2019

Intelex Technologies Inc.bought by

Industrial Scientific $753m#1seller company name buyer $ mil

HARBOURVEST PARTNERS, LLC, JMI EQUITY INTELEX TECHNOLOGIES INC. INDUSTRIAL SCIENTIFIC $753

KELSO & COMPANY 4REFUEL CANADA LP FINNING INTERNATIONAL INC. $260

There were 13 additional M&A exits with a disclosed value of $21M


MOST ACTIVE PE INVESTORS // YTD Q3 2019

111

87

32

25

14

14

12

7

5

# Deals $ Millions*

Desjardins Capital

Fonds de solidarité FTQ

BDC Capital Inc.

Fondaction CSN

Investissement Québec

Espresso Capital Ltd.

Caisse de dépôt et placement du Québec (CDPQ)

First West Capital

PFM Capital Inc.

$530

$1,315

$296

$324

$174

$14

$1,268

$36

$106

* Total deal values – includes all participating investors

most active pe firmdesjardins Capital

111 deals


CVCA METHODOLOGY // PRIVATE EQUITY

PRIVATE EQUITY DATA:Dataset includes only completed private equity deals (announced but yet to be completed deals are not included)

BUYOUT INVESTMENT FOR THE CONTROL OF A PORTFOLIO COMPANY, INCLUDING PLATFORM CREATION, SECONDARY BUYOUT

GROWTH SIGNIFICANT MINORITY INVESTMENT INTO A PORTFOLIO COMPANY, THROUGH NEW CAPITAL INFUSION AND RECAPITALIZATION

ADD-ON CORPORATE ACQUISITIONS BY MAJORITY CONTROLLED PE BACKED PORTFOLIO COMPANIES

DEBT DEBT INVESTMENT INTO PORTFOLIO COMPANIES

INFRASTRUCTURE INVESTMENTS INTO DEVELOPMENT AND MANAGEMENT OF INFRASTRUCTURE ASSETS BUT PE DOES NOT OWN THE UNDERLYING ASSETS

AGRI-FORESTRY AGRICULTURE, FOODS AND FORESTRY

AUTOMOTIVE & TRANSPORTATION TRANSPORTATION, LOGISTICS AND RELATED SERVICES

BUSINESS PRODUCTS & SERVICES BUSINESS PRODUCTS AND SERVICES

CLEANTECH ENERGY AND FUEL TECHNOLOGIES, EFFICIENCY AND CONSERVATION, RENEWAL ENERGY, ENVIRONMENTAL TECHNOLOGIES AND OTHER ENERGY AND ENVIRONMENTAL PRODUCTS AND SERVICES

pe deal type

pe sectors


CVCA METHODOLOGY // PRIVATE EQUITY

continued

CONSUMER & RETAIL CONSUMER PRODUCTS AND SERVICES, BRICK AND MORTAR RETAIL

FINANCIAL FINANCIAL SERVICES

ICT COMPUTER HARDWARE/SOFTWARE & SERVICES, INTERNET SOFTWARE & SERVICES, ECOMMERCE, ELECTRONIC & SEMICONDUCTOR, MOBILE & TELECOM AND SERVICES

INDUSTRIAL & MANUFACTURING EQUIPMENT AND MATERIAL MANUFACTURING

LIFE SCIENCES BIOTECH, MEDICAL DEVICES, PHARMACEUTICALS, EHEALTH, HEALTHCARE PRODUCTS AND SERVICES, AND OTHER MEDICAL RELATED PRODUCTS AND SERVICES

MINING & RESOURCES NON OIL AND GAS NATURAL RESOURCES

OIL & GAS, POWER OIL & GAS, POWER AND UTILITIES

REAL ESTATE PROPERTY DEVELOPMENT AND MANAGEMENT

pe sectors

ABOUT AND CONTACT

DARRELL PINTOVP, Research & Industry

Advancement

DAVID KORNACKIAssociate,

Research & Product

About CVCAWe’re how collaboration happens and how innovation and growth thrive.

The CVCA is Canada’s professional association for the venture capital and private equity industry. Our services and support establish a favourable and competitive ecosystem and lay the foundation for greater collaboration, innovation, growth and market intelligence. We strongly advocate for fair and competitive policy to keep our industry energized and future-ready.

From coast to coast, we bring members together; connecting private capital professionals to eachother generating meaningful partnerships, enabling connections to foster and knowledge to prosper.

We’re also the nation’s ultimate resource for data on Canadian private capital investments.

Please visit cvca.ca

@CVCACanada CVCA

CVCA - Canadian Venture Capital and Private Equity Association

372 Bay St., Suite 1201 Toronto, ON M5H 2W9

To obtain estimates for additional custom CVCA Intelligence data reports please contact [email protected]

AuthorsDarrell oversees all data related to Canadian private capital investments, exit and fundraising activities for the CVCA. Darrell has held senior positions at several global organizations including the Toronto Stock Exchange, Institutional Limited Partners Association, Thomson Reuters, Glaxosmithkline and the Interac Association. In between these, he also started his own successful management consulting company. He has worked in New York, London and Shanghai, but Toronto remains his favourite working city. He brings to the CVCA a passion for telling compelling stories with data. Darrell is currently on the board of a non-profit social housing in Peel, a member of Volunteer Toronto as well as an active volunteer with Woodgreen Community Services. He holds a BA in Philosophy/History from the University of Western Ontario and an MBA from the Rotman School of Management.

[email protected] | 416-487-0519 ext. 208

David is responsible for managing and maintaining CVCA Intelligence, the most comprehensive database for the Canadian venture capital and private equity industry. To ensure data quality, David works with and manages data partnerships with analysts, associates and CFOs from 256 of the industry’s leading Canadian venture capital & private equity firms, law firms and other service providers.

[email protected] | 416-487-0519 ext. 202

private equity canadian market overview // …...private equity canadian market overview // ytd q3...

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