Canada’s private capital industry is poised to have its best year for deal activity in buyout and related private equity (PE) markets since 2007, says a Canadian Venture Capital and Private Equity Association (CVCA) report.

This is largely due to the $12.5 billion merger of Tim Hortons with Burger King Worldwide.

And Canadian venture capital (VC) also continues to grow in terms of money invested and number of deals done. However, new capital commitments to Canadian VC funds continued to decline in the third quarter.

“Investments made by the Canadian private capital industry as a whole have increased significantly, which helps drive economic growth and innovation,” says CVCA CEO Mike Woollatt. “An area of concern is VC fundraising which continues to decline and may adversely affect future investment levels.”

Read: CVCA names first CEO

Private equity
Deal-making in Canada’s buyout and PE market rose sharply in both dollar amounts and number of transactions. Disclosed amounts totaled $19.8 billion in this period, fueled largely by the $12.5 billion investment in the merger of Tim Hortons with 3G Capital-backed Burger King Worldwide.

Even without this transaction, disclosed dollars invested still totaled $7.3 billion in Q3 of 2014, well above the $1.2 billion in values recorded in the same time period last year. As of Sept. 30, PE deals secured a disclosed $26.4 billion invested—more than twice the amount made during the whole of 2013 ($10.2 billion).

The number of deals also grew substantially—by more than 40% year over year. Between July and September there were 94 deals, bringing the total to 289 for the first nine months of 2014.

Read: Sector-focused private equity funds outperform

Venture capital
VC funds invested a total of $734 million in financing rounds during Q3, up 26% (from $581 million) year over year. Disbursement also grew by as much as 45% from Q2 of 2014.

Canadian VC market activity continues to track ahead of activity from last year. Over the first nine months, VC funds have invested more than $1.6 billion in total—a 16% increase (from $1.4 billion). The number of VC deals has also grown by 6% year over year, with a total of 361 financings counted at the end of Sept. 30.

The challenge for the VC market is to grow fundraising which has seen steady declines. While fundraising grew by 41% from Q2 to Q3 of 2014; fundraising has dropped markedly since last year. There is a 39% decrease when comparing Q3 of 2013 and Q3 of 2014 (from $258 million to $158 million), and overall fundraising is down 29% year over year (a drop from $1.1 billion to $801 million).

Read: VC industry bounces back

Copyright © 2020 Transcontinental Media G.P. Originally published on benefitscanada.com

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