Large Canadian institutional investors predict that, in general, less money will flow to the coffers of Canadian and U.S. private equity firms in 2008. Regarding the increase in international investing on behalf of Canadian investors during the last year, the majority of those same limited partners said that growth reflects their desire to build a more diversified portfolio.
These opinions came to light in a survey of 125 industry players including Canadian and U.S. institutional investors, buyout professionals and investment bankers commissioned by Canadian law firm Blake, Cassels & Graydon LLP and conducted by mergermarket, an information service that tracks mergers and acquisitions. The survey was conducted in late 2007 and early 2008. Of the investors surveyed, 10 were large Canadian institutional investors, along the lines of the
When it comes to fundraising this year, the big Canadian LPs foresee a slower trickle of money to North America buyout firms from all investment sources. A full 50 percent of the large Canadian institutional investors said there would be less capital available for LBO shops in 2008. Thirty percent said the amount would increase and 20 percent said it would remain the same as last year.
Canadian institutional investors and buyout shops have both become more active on the international scene, with institutional investors committing more capital to international general partners and buyout firms doing more deals abroad. A whopping 70 percent of Canadian large institutional investors said they sought international investments because they want to diversify their portfolios.
Only 30 percent of the LPs said they looked abroad because of a dearth of attractive Canadian deals, and 20 percent said it was simply a question of having to deploy a large amount of capital somewhere. The percentages on this question don’t add up to 100 percent because respondents were allowed to list more than one response.—J.P.