It seems as though the 2005 drop in Canadian buyout volume was an aberration, according to recently released data by Canada’s Venture Capital and Private Equity Association (CVCA) and Thomson Financial (publisher of PE Week).
Disclosed values for buyouts of Canadian companies reached $10.9 billion last year, double the $4.5 billion tally from 2005. It also is higher than the $6.7 billion raised in 2004. Similarly, Canadian buyout funds, including Onex Corp., Birch Hill Equity Partners, Richardson Capital Management and Torquest Partners, raised about $5.5 billion from limited partners last year. That’s more than four times the $1.2 billion raised in 2005.
This Canadian buyout growth is in line with a global increase in buyout volume, which saw a 4x rise for U.S. deals and about a 1.5x rise for non-North American deals. Of interest, though, is that Canadian firms are investing most of their capital outside of the 10 provinces. Canadian firms invested $13.4 billion last year, but only $3 billion of that was in local companies.
Overall,venture capital investment across Canada in 2006 amounted to $1.69 billion, nearly matching the $1.68 billion invested in 2005.
Geographically, though, Canada saw a shift in activity away from Ontario and into Quebec and British Columbia. For the full year, Quebec saw $603 million invested in 179 companies in its province, up about 9% from the $552 million of 2005. In British Columbia, 52 companies raised $298 million, up 30% from the $230 million of 2005. In contrast, 118 Ontario companies received $686 million in investments, a decline of 9% from the $755 million reported in 2005. Still, Ontario remained the largest venture capital market in Canada with a 40% share (down from 45% in 2005), followed by Quebec with 36% (up from 33%) and British Columbia at 18% (up from 14%).