Need To Know: Canadian Deals Drop

The value of Canadian private equity deals tumbled in the third quarter from the year-ago period, but were still far above crisis levels of just two years ago, Reuters reported, citing a report by Thomson Reuters, publisher of Buyouts, in partnership with the Canadian Venture Capital and Private Equity Association.

Private equity deals reported in the July-September period were valued at C$1.34 billion ($1.31 billion), or 40 percent less than the C$2.249 billion in deals reported in the same period last year, according to the report. The number of deals was also down, with 39 completed in the third quarter this year compared with 48 in the same period last year. Average deal sizes were also lower, with most tending to be worth less than C$500 million.

The CVCA said private equity fundraising remained strong, despite bumpy global markets, with C$2.7 billion in new capital commitments going to Canadian buyout, mezzanine and other private equity funds for the first nine months of 2011. The figure compares to C$3.2 billion raised in all of 2010.

MF Global Another Blow For Flowers

The meltdown of MF Global Holdings Ltd has dealt another blow to J.C. Flowers & Co. at a most inopportune time. Reports indicate the New York-based buyout shop could lose as much as $47.8 million on its investment in the bankrupt securities firm, which several regulatory agencies are investigating for its inability to locate some $600 million of its customers’ money.

The private equity firm was already trying to comfort investors about the lackluster performance of its sophomore fund, a $7 billion pool of capital raised in 2007. The fund had an IRR of -30.5 percent and an investment multiple of .34 as of March 31, according to the University of California. Its third fund, which secured $2.3 billion in commitments in 2009, is performing better, with an unrealized gain of about 30 percent, according to sister Web site peHub.

Meanwhile, the brouhaha has also severely strained the relationship between J. Christopher Flowers, the founder of the firm, and Jon Corzine, with whom Flowers had risen through the ranks at Goldman Sachs. After Corzine lost his bid to be re-elected governor of New Jersey in 2009, Flowers recruited him as an operating partner at the private equity firm and, eventually, to head MF Global. Flowers was “embarrassed and disappointed by MF Global’s collapse,” The Wall Street Journal reported, and the two have hardly spoken since. Flowers does not expect to keep Corzine on as an operating partner due to the MF Global debacle, the Journal said.