Market stability seen boosting Canadian PE

The gauge for exits may be on the way up in Canada as markets stabilize and investors look for ways to sell assets held for years, fund managers say.

Despite recent turbulence sparked by events in Europe, markets worldwide have stabilized in recent quarters, with credit and debt markets returning and supplying leverage that is key to financing mergers and acquisitions.

Pundits say there is a backlog of dozens of companies in Canada ready to either be sold or taken public.

“We’re seeing a lot of discussion now around exits, but very few have actually happened yet,” Rick Nathan, managing director at Toronto-based Kensington Capital Partners, said on the sidelines of the annual Canadian Venture Capital and Private Equity Association (CVCA) conference last week in Ottawa.

Exits experienced a drought through the recent financial crisis and recession in large part because buyers and sellers could not agree on valuations.

“I think that our overall industry is moving out of recession fairly effectively. It is still in the beginning stages of that recovery but it’s definitely happening,” Nathan said.

A number of investors were in Ottawa last week for the CVCA conference, the largest of its kind in Canada, in which investors, fund managers and bankers sat down to map out strategies for an economy that is gathering steam.

Low interest rates make the debt component of deals easier to arrange, making strategic mergers all the more attractive, say investors.

“Probably upward of 70% of our exits come from M&A,” said Chris Albinson, a Canadian native and the managing director of Panorama Capital in Menlo Park, Calif. —Pav Jordan, Reuters