of 16
1H 2015
CAPITAL CONTINUES FLOCKING TO CANADA; BOTH PE AND VC DOLLARS UPPAGE 3
ACT IV IT Y BY PROVINCE PAGE 12
LEAGUE TABLESPAGE 16
CA
N
CROSS-BORDER BREAKDOWN PAGE 6
CONTENTSIntroduction
Private Equity
Cross-Border Breakdown
Venture Capital
PE Deals by Size
VC Rounds by Size
PE Investment by Industry
VC Investment by Sector
Activity by Province
PE Exits
VC Exits
PE Fundraising
League Tables
3
4-5
6
7
8
9
10
11
12
13
14
15
16
CREDITS & CONTACTPitchBook Data, Inc.
JOHN GABBERT Founder, CEO
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Content, Design, Editing & Data
ALEX LYKKEN Editor
ANDY WHITE Lead Data Analyst
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GARRETT BLACK Senior Financial Writer
BRIAN LEE Data Analyst
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JESS CHAIDEZ Graphic Designer
Contact PitchBookwww.pitchbook.com
RESEARCH
EDITORIAL
SALES
COPYRIGHT 2015 by PitchBook Data, Inc. All rights reserved. No part of this publication may be reproduced in any form or by any meansgraphic, electronic, or mechanical, including photocopying, recording, taping, and information storage and retrieval systemswithout the express written permission of PitchBook Data, Inc. Contents are based on information from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Nothing herein should be construed as any past, current or future recommendation to buy or sell any security or an offer to sell, or a solicitation of an offer to buy any security. This material does not purport to contain all of the information that a prospective investor may wish to consider and is not to be relied upon as such or used in substitution for the exercise of independent judgment.
2 PITCHBOOK 1H 2015
CANADA BREAKDOWN
IntroductionPrivate investment in Canada is booming. Largely thanks to the energy and software segments,
U.S. private equity (PE) and venture capital (VC) firms are migrating north in search of deals, and finding plenty of them. PE investors wrapped up 63 transactions in the first quarter totaling C$8.1 billion, in line with previous strong quarters; VC investors funneled C$420 million into Canada in 1Q across 88 rounds, including 24 late stage investments. Almost half (45%) of all VC investments in 1Q were for software startups. On the PE side, 30% of 1Q PE dollars went to Canadian energy companies; in 2013 that percentage was a much lower 16%.
Not only are more dollars coming to Canada, so too are the number of foreign investors looking to find opportunities. The U.S. in particular continues to head north; last year marked the first time that the number of unique U.S. investment firms operating in Canada outnumbered domestic investors in both asset classes. For PE, thats been the case for over a decade, though its worth noting that the number of unique U.S. firms in Canada has grown at a faster clip than the number of new Canada-based firms being created. Between 2010 and 2013, there was a 129% increase in the number of U.S. investors striking deals in Canada, while the number of new Canadian firms jumped a more modest 81%.
On the VC side, though, 2014 may turn out to have been a watershed moment. In all, 134 unique U.S. VC firms invested in Canada last year compared to 116 Canada-based firms. The two countries are going in opposite directions on this point. Between 2012 and 2014 there was a 26% increase in unique U.S. investors and a 9% decline for Canadian firms.
By size, PE investors have scaled back their focus on smaller transactions, though most activity is still very modest: About 73% of 1Q deals were in the sub-C$250 million range, split evenly between the sub-C$25M and C$25M-C$250M buckets. Thats a big change, however, looking back at 2010 levels, when 71% of all PE activity was in the smallest of size categories, C$25 million and under. Its curious that larger transactions are only now
beginning to come back, considering that leverage use in Canada isnt very heavy and Canadas banking system survived the crisis intact. Perhaps the main difference between 2010 and 2015 is the number of new U.S. entrantsand their appetites for larger deals and smaller equity checks.
We hope the information and data in this report are useful and help inform your decision-making process in the coming quarters. As always, if you have any questions, comments or suggestions, please contact us at [email protected].
For the first time, U.S. investors outnumber
domestic PE and VC firms active
in Canada.
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What will you do with it?PITCHBOOK FOR PE FIRMS
Private EquityCANADIAN PE DEAL FLOW BY QUARTER
DEAL FLOW BY YEAR
Canada recovered much more quickly from the financial
crisis than the U.S. did, at least from a PE perspective. Between 2010 and 2013, Canadian activity popped 99% on a deal flow basis versus a respectable 26% in the States. Of course, the more mature U.S. market has become more saturated relative to the Canadian market, which is still something of a green field for private equity. Canadas banking system was largely unhurt by the crisis, which helped minimize the countrys decline in PE deal flow to -25% between 2007 and 2009. In the U.S., PE activity was cut in half (-51%) in the same two-year period. Another comparison: Canadian deal flow was back at pre-crisis levels as quickly as 2011 (9% higher than 2007, in fact) while U.S. deal flow only hit that milestone last
year. Whats more, capital invested levels in the U.S. havent come close to approaching 2007s $908 billionthe $527 billion invested last year would have covered just 58% of the 2007 tab. In Canada, the C$42.6 billion invested in 2014 was only 9% off the 2007 record (C$47 billion). And with the Canadian energy sector looking increasingly lucrative, we wouldnt be shocked if 2015 challenges that record.
Energy investments are already strong at C$2.4 billion through 1Q, about 30% of all first quarter value. 2015 is already approaching 2013s final tally of C$4.9 billion and should compare favorably to the C$11.7 billion invested last year, a record. At least one massive PE deal is in the works this year, a C$1.7 billion offer for Torontos Pacific Rubiales
We wouldnt be shocked to see
Canadian PE activity challenge
its 2007 record this year.
Source: PitchBook
Source: PitchBook
*as of 3/31/2015
C$3
C$3
C$4
C$5
C$6
C$9
C$5
C$6
C$6
C$8
C$8
C$10
C$7
C$8
C$7
C$9
C$9
C$10
C$12
C$12
C$8
3339 36
49
6661
34
52 53
63
56
6672
80
74
86
65
71
82
55
63
0
10
20
30
40
50
60
70
80
90
100
C$0
C$2
C$4
C$6
C$8
C$10
C$12
C$14
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2010 2011 2012 2013 2014 2015Capital Invested (C$B) # of Deals Closed
C$16
C$27
C$33
C$30
C$43
C$8
157
213238
312
273
63
0
50
100
150
200
250
300
350
C$0 C$5
C$10 C$15 C$20 C$25 C$30 C$35 C$40 C$45
2010 2011 2012 2013 2014 2015*Capital Invested (C$B)# of Deals Closed
4 PITCHBOOK 1H 2015
CANADA BREAKDOWN
Energy that includes PE-backed Harbour Energy on the buy side. Other pending deals include Coral Hill Energy, which is being purchased by Aspenleaf Energy (backed by ARC Financial and OTPP) for C$324 million, and Calgary-based GASFRAC, which agreed to terms with another ARC portfolio company after receiving bankruptcy approval in March. Not all energy opportunities are in the form of buyouts. A number of PIPE investments are also popping upPE firms are buying stock in Pershimco Resources (TSX: PRO), Sama Resources (TSX: SME) and Africa Oil (TSE: AOI), the latter of which is taking in C$122 million
of equity from Helios Investment Partners.
By and large, however, a majority of PE deals in Canada are of the buy-and-build variety, which has been the case since 2008. On a percentage basis, Canada has been more active with add-ons compared to U.S. investors, which eclipsed the 50% mark for the first time in 2011. One notable difference between the two markets, however, is that in Canada, platform activity has been relatively steady the past few years, while its been the opposite in the U.S., where platform activity was 42% lower by count in
INVESTMENTS BY DEAL TYPE
BUYOUTS: ADD-ONS VS. NON ADD-ONS
Buy-and-build is prevalent in Canada, but add-ons have evened out by count in recent years.
2013 compared to the height of the boom in 2007. In Canada, platform activity actually increased between those years, from 79 in 2007 to 89 in 2013 (+13%). Add-ons, on the
other hand, arent as prevalent in Canada as one might think. Add-on counts have evened out somewhat since 2012, and on a much smaller scale, as well.
Private Equity
Source: PitchBook*as of 3/31/2015
Source: PitchBook*as of 3/31/2015
32
55 65
43
28
66
85 95 97
28
44
79
60
29 53
56
66
89
72
12
42% 41%
52%
60%
35%
54% 56%
52%
57%
70%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
20
40
60
80
100
120
140
160
180
200
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*Add-on Non Add-on Add-On % of Buyout
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
*
PlatformCreation
PIPE
PE Growth
Recap
Add-on
Buyout
5 PITCHBOOK 1H 2015
CANADA BREAKDOWN
Cross-Border Breakdown
The extent to which Canada has drawn outside investment
is evident in the chart above, which shows the number of unique investors in Canada-based companies per year. Despite the decline between 2013 and 2014, the sheer increase in foreign interest is unmistakable. By count, PE investors increased the most, with the number of U.S. VC firms alone reaching a decade high last year at 134. More U.S.-based VC investors were active last year than even local VC firms,
UNIQUE PE INVESTOR COUNT (#) BY HEADQUARTERS AND YEAR
which could signify that there is a lack of significant VC funding by Canadian firms at the Series B stage, leading growing startups to look elsewhere for capital. Investors headquartered outside the U.S. may be flocking to the Canadian scene to fulfill that need, with already a handful of firms investing in 1Q.
A number of factors are likely driving this surge in outside investment, including heightened competition elsewhere, opportunistic investors looking
to take advantage of troubled commodity players and changes in certain tax provisions. Some attribute the increase in U.S.-based investor activity to not only market dynamics but also to changes in clearance certificates for tax-exempt gains by non-residentsand eliminating withholding on certain payments that occurred several years ago. On top of that, the recent devaluation of the Canadian dollar versus the USD has given a little extra pop to U.S. dry powder.
Source: PitchBook*as of 3/31/2015
62
82 87
58 6484
92116 110
84
126 124
83 80
131
163183
167
1522 25 22 16 19
35 36 27
0
50
100
150
200
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
Canada United States Other
73 69 71 66
94
116128 121
116
47 59 62 3753
88106 116
134
1822 26 20 14
24 2331 30
0
20
40
60
80
100
120
140
160
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*Canada United States Other
UNIQUE VC INVESTOR COUNT (#) BY HEADQUARTERS AND YEAR
Source: PitchBook*as of 3/31/2015
6 PITCHBOOK 1H 2015
CANADA BREAKDOWN
Venture CapitalCANADIAN VC ACTIVITY BY QUARTER
MEDIAN ROUND SIZE BY SERIES AND YEAR
Canada is becoming a bigger hunting ground for
VC investors. The C$1.8 billion invested last year was easily a record by total value, and 2013s 374 rounds were about three times as many rounds recorded in 2005 and 2006 each. The increase has been across the board, with angel/seed, early stage and late stage financings all becoming much more frequent. Five of the last six quarters have eclipsed C$420 million in aggregate, with 1Q 2015 representing the sixth highest quarter for Canadian VC capital invested. While its true that Canada wont be reaching Silicon Valley heights any time soon, it also doesnt seem to be experiencing the same crunch thats hitting the U.S. market, where financings were down 24% between 3Q 2014 and 1Q 2015. And Canadian activity should remain strong for the foreseeable future, with about C$2.2 billion of VC capital raised since 2013.
VC round sizes have been creeping up, however. The median Series B financing was C$17.3 million in 1Q, a 33% jump over the 2014 median of C$13 million. Late stage round sizes in Canada are consistent with U.S.
Source: PitchBook
Source: PitchBook
*as of 3/31/2015
36 34 29 27
53
35
46
45
62
53
74
60
109
7067
76
103
86
105
80
88
79 82
92 88
0
20
40
60
80
100
120
C$0
C$100
C$200
C$300
C$400
C$500
C$600
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2009 2010 2011 2012 2013 2014 2015
Capital Invested (C$M) # of Rounds Closed Angel/Seed Early VC Later VC
sizes, with the Series C median at C$22.9 million in 1Q and the median Series D+ at C$26.5 million. The median U.S. Series C size was $15.4 million in 2014 and Series D+ was $27 million.
C$1.2 C$1.2 C$0.5 C$0.6 C$0.5 C$0.8 C$0.7 C$0.5C$1.4 C$1.2
C$6.4C$4.6
C$3.6 C$4.0 C$4.2C$5.1
C$3.1C$4.1
C$6.1 C$6.4
C$11.6
C$8.6C$7.2
C$8.8 C$7.8
C$10.2C$9.0
C$10.1
C$13.0
C$17.3
C$0
C$2
C$4
C$6
C$8
C$10
C$12
C$14
C$16
C$18
C$20
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*Seed Series A Series B
7 PITCHBOOK 1H 2015
CANADA BREAKDOWN
DEAL COUNT BY DEAL SIZE
CAPITAL INVESTED (C$) BY DEAL SIZE
PE Deals by Size
About 70% of all PE capital invested in Canada is in the upper and core middle markets.
As the Canadian PE scene has thrived over the past
few years, it has seen a gradual increase in middle-market activity, similar to that in the U.S. In 2010, deals in the sub-C$25 million range accounted for 70% of all deal flow, while in 2014, that percentage fell to a little over 40%. Deals in the C$25 million to C$500 million rangethe heart of the middle marketaccounted for nearly 48% of all activity in 2014. The proportions of capital invested at different size ranges also aligns with that trend, as the share of money invested in the C$25 million-C$250 million range has remained pretty steady over the past five years. This push to the middle market reflects growing price pressure resulting from competition and bids from strategics, with investors paying up more for quality in an uncertain economic environment. In addition, PE firms are said to be increasingly specializing in particular industries, developing in-house expertise in order to unlock growth. This also supports the growing use of add-ons, which, along with growth investments, make up the majority of deal flow in the lower price ranges of the market. The proliferation of small, family-owned businesses in the country offers plenty of opportunities for local PE firms to cut deals in the lower middle market, which often leaves outside investors to target divested assets of larger companies in the core and upper middle markets. Source: PitchBook
*as of 3/31/2015
Source: PitchBook*as of 3/31/2015
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
*
C$2.5B+
C$1B-C$2.5B
C$500M-C$1B
C$100M-C$500M
C$25M-C$100M
Under C$25M
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
*C$2.5B+
C$1B-C$2.5B
C$500M-C$1B
C$100M-C$500M
C$25M-C$100M
Under C$25M
8 PITCHBOOK 1H 2015
CANADA BREAKDOWN
ROUND COUNT BY SIZE
CAPITAL INVESTED (C$) BY ROUND SIZE
VC Rounds by Size
Rounds worth C$25M+ have steadily increased their share of total capital invested.
By many accounts the Canadian tech scene is
flourishing; VC firms are taking note, with last year seeing a decade high of C$1.8 billion invested. Thats a 22% increase over the tally in 2013, and even though round counts in 2014 fell from a high of 374 in 2013, the number of financings was robust at 341. Somewhat similar to the U.S. venture scene, quite a few of those financings were of considerable size, with 31 rounds in the C$10 million to C$25 million range in 2014. Unlike VC in the U.S., however, 1Q numbers remained stable. Early stage numbers were actually up the most in 1Q, although breaking down the data by quarters reveals a gradual (if volatile) rise in the number of late stage rounds from 2010 to 2012, with the merest of upticks in 2Q and 4Q 2014.
Theres been talk of a capital crunch at the Series B or later stages, with startups in search of larger checks often turning to U.S.-based firms capable of shelling out larger sums. Some attribute this to a surge in startups across Canada, which may be the case. In addition, the median size of Series C rounds has taken off in the past two years to crest at C$17.3 million in 1Q. Although not as expensive as certain areas of the U.S. VC scene, the Canadian VC ecosystem appears to be experiencing its own surge in prices, which could be contributing to investor reticence. Source: PitchBook
*as of 3/31/2015
Source: PitchBook*as of 3/31/2015
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
*
C$25M+
C$10M-C$25M
C$5M-C$10M
C$1M-C$5M
C$500K-C$1M
UnderC$500K
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
*
C$25M+
C$10M-C$25M
C$5M-C$10M
C$1M-C$5M
C$500K-C$1M
UnderC$500K
9 PITCHBOOK 1H 2015
CANADA BREAKDOWN
PE Deals by IndustryDEAL COUNT BY INDUSTRY
CAPITAL INVESTED (C$) BY INDUSTRY
Through 1Q 2015, each industrys proportion of PE
deal flow remained relatively steady compared to both 2013 and 2014. B2B captured the largest share of deals once again, topping out at 37% of 1Q activity, with energy a distant second at 17%. The extent to which PE firms target Canadian commodities is evident in that latter percentage; with commodities futures and prices still in flux to a large extent, PE firms are investing opportunistically if cautiously, with several big names such as Warburg Pincus amassing capital specifically for energy plays that may well be put to work in Canada. B2Bs prevalence is partially due to PE investors attention to quality deal sourcing when it comes to commodities in particular, as timing is crucial, given commodity business cycles.
Percentages of capital invested only further illustrate PEs focus on B2B and energy, with the two industries combined accounting for 49% of all dollars invested in 2014 and 62% in 1Q. The fact materials & resources saw a staggering C$5.9 billion in capital invested last year, the most in years, should also be noted. Theres been talk of PE firms looking at the mining sector, where valuations remain depressed and companies are low on cash, in order to put their hoard of dry powder to work for some time now. Last year saw what could be the first definite signs of that shift being realized, given the totals of capital invested and deal activity. In 1Q, however, only a handful of deals in the materials & resources space occurred, so it may be a little premature to declare a definitive surge in PE mining deals is occurring.
Source: PitchBook*as of 3/31/2015
Source: PitchBook*as of 3/31/2015
0
20
40
60
80
100
120
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
IT Healthcare B2C B2B
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
*
B2B
B2C
Energy
FinancialServices
Healthcare
IT
Materials &Resources
Energy is taking up a bigger slice of Canadian PE dollars in 2015 as U.S. investors head north while prices are low.
10 PITCHBOOK 1H 2015
CANADA BREAKDOWN
VC Rounds by SectorROUND COUNT BY SECTOR
CAPITAL INVESTED (C$) BY SECTOR
Even as Canadian venture activity picked up its pace
over the past few years, software accounted for a growing proportion of all financings. 2013 recorded 148 financings for software companies, a 36% increase from 2012 and easily a high for the decade. 2014 saw a bit of a slump in the count of software rounds but was still the second most active of the past 10 years by a healthy margin. Commercial services took second place in terms of share of rounds. 2013 was a banner year for that sector in terms of capital invested, with about C$429 million amassed.
Software, however, has grown considerably over the past few years; its proportion of total dollars invested last year approached 40% for the first time, a massive C$687 million. That was not only a record for the decade but a rapid jump upward from the previous highest tally in 2012a 66% increase. Among the overall rise in VC invested last year in Canada, however impressive the software numbers were, other sectors racked up plenty of cash. Pharma & biotech startups raked in around C$145 million, a sum closer to what the space saw in its heyday prior to the financial crisis. Healthcare devices & supplies saw more capital funneled by VC firms than ever before, a hefty C$67 million.
Source: PitchBook*as of 3/31/2015
Source: PitchBook*as of 3/31/2015
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
*
Software
Media
CommercialServices
HC Devices& Supplies
Pharma &Biotech
Non-core
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
*
Software
Media
CommercialServices
HC Devices& Supplies
Pharma &Biotech
Non-core
Software is gaining as a percentage of both activity and dollar amounts.
11 PITCHBOOK 1H 2015
CANADA BREAKDOWN
Activity by ProvincePE DEALS (#) BY PROVINCEAnalyzing deal flow by
province doesnt produce too many surprises. When it comes to PE activity, the heaviest hitters are Ontario, Quebec, British Columbia and Alberta. In 2014, Ontario accounted for 35% of all PE deal flow, while Alberta was home to 23%in 1Q 2015, Ontarios share of deal flow stood at a bare majority of 51%, while Quebec and Alberta matched at 16% apiece. The ebb and flow of provincial activity makes sense given relative levels of economic activity, particularly by sector. For instance, BCs economy is apparently doing well given plunging oil prices and a boost in consumer spending, Vancouvers thriving tech scene and more. Meanwhile, Alberta long enjoyed steady growth in PE activity, but the past two quarters have seen a significant drop. That could indicate wariness as oil prices remain depressed, although that may be more of a temporary pullback, since canny investors will likely take advantage of oil & gas producers running into difficulty given the drop in prices.
On the venture capital side, Alberta doesnt see too much activity, while BCs portion of overall financings soars. Last year saw BC capture over 20% of all VC activity, with Quebec roughly the same, while Ontario dominated at about 40%. From 2013 to 2014, Quebec was the only one among those three provinces to see its total round count grow, albeit by a small amount. Through the end of 1Q, however, only Ontario appears on pace to remain at relatively high levels, with just about 50% of all Canadian VC rounds.
VC ROUNDS (#) BY PROVINCE
Taking both PE and VC investment into account, Ontario claims the lions share of Canadian deal flow.
Source: PitchBook*as of 3/31/2015
Source: PitchBook*as of 3/31/2015
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
*
Alberta
British Columbia
Manitoba
New Brunswick
Newfoundland
Nova Scotia
NW Territories
Ontario
Prince EdwardIslandQuebec
Saskatchewan
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
*
Alberta
BritishColumbia
Manitoba
New Brunswick
Newfoundland
Nova Scotia
Ontario
Prince EdwardIsland
Quebec
Saskatchewan
12 PITCHBOOK 1H 2015
CANADA BREAKDOWN
PE Exits
EXIT FLOW BY EXIT SIZE (#)
CANADIAN EXIT FLOW BY EXIT TYPE (C$B) AND YEAR
With a mammoth first quarter, PE capital exited
last year skyrocketed to about C$29.5 billion across 67 liquidity events. Just edged out by the 72 exits in 2013, last years tally of value exited handily outpaced any other year of the decade. Quarterly data reveals considerable fluctuation, however, with 2012second place in terms of capital exitedexhibiting a steadier spate of exit events. Last years record value was largely due to a bevy of high-profile, blockbuster purchases by strategic buyers, like Aptalis Pharmas $2.9 billion acquisition by Forest Laboratories (NYSE: FRX). The gradual increase in purchase price multiples, although detrimental to buyers, has been quite beneficial to sellers, with healthy exit activity in the C$100 million to C$500 million range in particular over the last few years. In addition,
with corporate M&A picking up over the same timeframe, PE investors may have difficulty competing with strategics, but for those looking to unload aging portfolio companies, it is a boon.
Source: PitchBook*as of 3/31/2015
Source: PitchBook*as of 3/31/2015
C$0
C$5
C$10
C$15
C$20
C$25
C$30
C$35
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*Corporate Acquisition IPO Secondary Buyout
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
*
C$2.5B+
C$1B-C$2.5B
C$500M-C$1B
C$100M-C$500M
C$25M-C$100M
UnderC$25M
13 PITCHBOOK 1H 2015
CANADA BREAKDOWN
VC Exits
MEDIAN EXIT SIZE BY TYPE (C$M)
CANADIAN EXIT FLOW BY EXIT TYPE AND YEAR
For both the PE and VC industries, the past couple
years have been a selling spree. Canadian VC is no exception, with 2013 and 2014 seeing a total of 132 VC-backed exits. Although the tally of yearly capital exited was highest in 2012due in large part to Enobia Pharmas purchasethe C$29 billion total between 2013 and 2014 is immense, reflecting how successful VC firms were at achieving liquidity as of late. Breaking down exit flow by size yields some interesting points. In 2014, the majority of VC-backed exits were worth C$100 million or more, while out of the past decade, only 2013 saw a sudden flurry of sales in the sub-C$25 million range. There havent been many public flotations of VC-backed companies, though its worth noting VC-backed Canadian companies raked in a decade high of C$2 billion through public offerings last year, Lumenpulse and Kinaxis notable among them. The vast majority
of exits are achieved through corporate acquisitions, although over the past couple years a fair amount of startups have been snapped up by PE buyers. When it comes to which firms shell out the
most capital, however, corporates dominate. 2012 saw a vast C$18 billion paid out for VC-backed holdings, with 2014 taking third place for the decade at nearly C$14 billion.
Source: PitchBook*as of 3/31/2015
Source: PitchBook*as of 3/31/2015
C$7
C$4C$5
C$15
C$3
C$6
C$8
C$18
C$10
C$14
C$1
C$0.5
C$0.5C$0.2
C$0.4
C$0.3
C$1.6
C$0.6
C$0.4
C$0.4
C$2.0
C$2.3
C$2.0
C$1.6
C$0.7
C$0.7
0
5
10
15
20
25
30
35
40
45
50
C$0
C$5
C$10
C$15
C$20
C$25
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
PE Buyout ($)
IPO ($)
Corp. Acq. ($)
Corp. Acq. (#)
IPO (#)
PE Buyout (#)
C$337C$114 C$59
C$134 C$128 C$182C$248
C$85C$242
C$580
C$349
C$225
C$671
C$1,206
C$739
C$59
C$1,024
C$775
C$0
C$200
C$400
C$600
C$800
C$1,000
C$1,200
C$1,400
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
Acquisition/Buyout IPO
14 PITCHBOOK 1H 2015
CANADA BREAKDOWN
PE FundraisingCANADIAN PE FUNDRAISING BY YEAR
PE FUNDS TO HIT FUNDRAISING TARGET (%)
Fundraising by PE Canadian investors is more sporadic
than in more mature PE ecosystems, which must be taken into account when analyzing capital raised. The C$500 million raised in 1Q 2015 isnt as meager as it may appear at first glance, given the sheer level of fluctuation on quarterly basis. The yearly data from 2013 and 2014 offers a clearer picture and explains why the fundraising trail may be the road less traveled so far in 2015. Canadian PE firms closed 23 pools of capital from 2013 to 2014, amassing over C$14 billion in commitments. With that much raised, investors might have more than enough overhang to deal with, especially as finding quality targets remains difficult by many accounts.
Fewer vehicles under C$100 million in size have also been raised as of late, reflecting how, in a competitive dealmaking environment, LPs appear to be placing their confidence in larger, more established firms. Consider, for example, Onex, which closed its latest flagship fund on $5.7 billion last year. That level of confidence is further evidenced by the prevalence of successful fund closings over the past couple years, with 75% of funds hitting their target in 2014. Buyout-dedicated vehicles are preferred by LPs among other private equity fund types; that particular preference may be skewed by the fact that a handful of highly successful buyout shops have been the ones collecting commitments.
Looking ahead, its hard to see that state of affairs changing.
PE fundraising is not as frequent today as it was pre-crisis, but managers are starting to hit their targets again.
Source: PitchBook*as of 3/31/2015
Source: PitchBook*as of 3/31/2015
C$10
C$3
C$2
C$6
C$4
C$3
C$2
C$6
C$8
17
21
15
11
19
15
9
13
10
2
0
5
10
15
20
25
C$0
C$2
C$4
C$6
C$8
C$10
C$12
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*Capital Raised (C$B) # of Funds Closed
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*Hit Target Missed Target
15 PITCHBOOK 1H 2015
CANADA BREAKDOWN
1Q 2015 Deals League Tables
Warburg Pincus
ARC Financial
Brookfield Asset Management
Fulcrum Capital Partners
GI Partners
Klass Capital
Madison Dearborn Partners
Resource Capital Funds
Vista Equity Partners
3
2
2
2
2
2
2
2
2
PE INVE S T OR DE AL SCassels Brock & Blackwell
Stikeman Elliott
Bennett Jones
Davies Ward
Paul Hastings
Fasken Martineau
Goodmans
BakerHostetler
Torys
Orrick Herrington & Sutcliffe
Norton Rose Fulbright
DLA Piper
Wachtell, Lipton, Rosen & Katz
Kirkland & Ellis
5
3
2
2
2
1
1
1
1
1
1
1
1
1
L AW F IRM PE DE AL S
William Blair & Company
Signal Hill
Shea & Company
RBC Capital Markets
Perella Weinberg Partners
NewPoint Capital Partners
National Bank Financial
Morgan Stanley
Mesirow Financial
KPMG
Houlihan Lokey
Harris Williams & Co.
Generational Equity
CIBC World Markets
CCC Investment Banking
BMO Capital Markets
BDO Canada
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
ADVISOR PE DE AL S
Real Ventures
Business Development Bank of Canada
iNovia Capital
BDC Capital
MaRS Investment Accelerator Fund
Innovacorp
BDC Healthcare Venture
Fonds de solidarit FTQ
OMERS Ventures
500 Startups
Angel One Investor Network
Atlantic Canada Opportunities Agency
Blue Sky Capital
Capital Angel Network
Cycle Capital Management
Export Development Canada
Federal Econ Dev. Agency for S. Ontario
Kayne Anderson Capital Advisors
Lumira Capital
New Brunswick Innovation Foundation
Plaza Ventures
Relay Ventures
SoftTech VC
Telesystem
13
6
6
5
5
4
3
3
3
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
VC INVE S T OR ROUNDS
Source: PitchBook
Source: PitchBook
Source: PitchBook
Source: PitchBook
16 PITCHBOOK 1H 2015
CANADA BREAKDOWN
