TOWERING IN TORONTO(2)

In 1999, buyout money was not exactly flooding into Canada, which suited the partners at ONCAP just fine.

That year, the firm was created by publicly traded North American private equity firm, Onex, to target middle-market opportunities in Canada and the US. Hired to lead the Toronto-based group was Michael Lay, a former private equity investment professional with the Ontario Teachers' Pension Plan.

ONCAP closed its debut fund on C$400 million – a substantial amount by the standards of late-1990s Canadian private equity. Investors have not been disappointed. Eight years later, the fund is negotiating the exit of its one remaining portfolio company. The fund boasts a gross IRR “in the 40 percent range”, according to a source, producing a roughly four-times return on invested capital.

It helped that all six platform companies acquired by ONCAP were winners for the firm. None were more successful than WIS International, an inventory management company. The deal began in 2003 when ONCAP acquired Canada's Western Inventory Services. This was merged with a Washington Inventory Service, the second-largest such firm in the US with additional business in Latin America, Asia and Europe. In January, ONCAP sold the renamed company to American Capital, realising an eight-times return.

January proved an especially fruitful month for the firm. It also completed the C$120 million IPO of Futuremed, a provider of equipment to the longterm care industry. In the offering, ONCAP realised a four-times return. Last September the deal won Deal of the Year from the Canadian Venture Capital and Private Equity Association.

Last May, ONCAP raised C$575 million for its second fund, which is now approximately 20 percent invested.

ONCAP's success further boosts the fortunes of Onex, the megafund-managing parent company, now among the most significant investors in North America. The firm, led by chairman and chief executive Gerald Schwarz, last year closed on US$3.45 billion for Onex Partners II.

Canadian private equity had its biggest year ever last year, and the Onex family of funds looks set to remain the biggest fish in a growing pond.

OVP CLOSES $250M FUND
Kirkland, Washington-based earlystage venture capital firm OVP Venture Partners has closed its seventh fund, OVP VII, at $250 million. The fund exceeded its target of $200 million (€190 million). The first close of $207 million came in May 2006. Since then, OVP VII has invested in Menlo Park-based GainSpan, a spinout of Intel Corporation, Bellevue, Washington-based Talyst, a pharmacy solutions provider, and Sunnyvale, California-based Tzero Technologies, a maker of fabless semiconductors. Two more investments are pending, the firm said in a statement.

NOKIA EXPANDS FUND OF FUNDS
Nokia Growth Partners, the private equity and venture capital firm associated with mobile phone maker Nokia, has added $100 million to its fund of funds programme. The fund of funds focuses on “top-tier” venture capital funds that invest in emerging markets, including India and China. The programme targets new funds that invest in technologies that fall outside of Nokia's traditional areas of operation. “It is obvious that today's mobile handset is about photos, music, TV, video, navigation, buddy finding, even social networking,” Tero Ojanpera, Nokia's executive vice president and chief technical officer, said in a statement. “Media sharing and staying connected is what the phenomenon is all about. In order to capitalize on these trends, Nokia will need to partner with third parties and adapt and adopt with greater speed and agility than ever before.”

THOMPSON STREET CLOSES $300M FUND
St. Louis, Missouri-based private equity firm Thompson Street Capital Partners has closed its second fund, Thompson Street Capital Partners II, at $300 million (€228 million). The fund is twice the size as its previous one, which closed at $145 million in 2002. “Our selection criteria will remain largely the same with Fund II, yet we will have the ability to invest in larger deals, potentially up to $200 million in enterprise value,” James Cooper of Thompson Street said in a statement. At the time of the close, TSCP II had already made its first investment. It formed CESM Holdings to invest an undisclosed amount in three electrical component manufacturing and distribution companies: Tacoma Electric Supply, Connecticut Electric Switch Manufacturing and Parallax Power Supply.

TPG MID-MARKET FUND ADDS OREGON
TPG STAR, a mid-market, multistage fund associated with Texas Pacific Group, received a commitment of $75 million from the Washington State Investment Board, according to the board's December minutes. The target goal for the fund has been reported as $1 billion. It will focus on global venture capital, growth equity, turnaround and mid-market buyout transactions in North America, India and China, the minutes said. Jim Coulter, William McGlashan and Jamie Gates represented Texas Pacific at the meeting. A motion to have the private markets committee recommend the investment of up to $100 million to the board was carried unanimously.

HAMILTON LANE, PCG BATTLE FOR MANDATE
Bala Cynwyd, Pennsylvania-based Hamilton Lane and La Jolla-based Pacific Corporate Group (PCG), two alternative investment advisory firms, are the finalists in the Oregon Investment Council's search for a new private equity advisor. PCG is the incumbent in the race to become Oregon's sole private equity advisor. The council will make a final decision in April, according to recent minutes from the council's meeting with representatives from the two advisory firms. Oregon requested proposals from private equity advisory firms after heavy turnover at PCG occurred, including the departure of the president of PCG's asset management division, Monte Brem. PCG is owned by its founder, Christopher Bower. PCG has been the $75 billion Oregon Investment Council's advisor for the past 15 years.

2007 SET TO SMASH FUNDRAISING RECORDS AGAIN
Private equity fundraising could reach new heights in 2007, surpassing the all-time high reached in 2006, according to research firm Private Equity Intelligence. Fundraising could reach $500 billion (€387 billion) for the first time ever this year, according to the research firm's Global Fundraising Review. In 2006, 684 new funds raised an aggregate of $432 billion. Private Equity Intelligence estimated that nearly 900 funds were already on the market in late January and predicted that another 500 would join during the course of the year.

CANADIAN PRIVATE EQUITY AT RECORD LEVEL IN 2006
Canadian private equity deal volume doubled to $10.9 billion (€8.4 billion) over 90 deals in 2006, and fundraising quadrupled to $5.4 billion (€4.9 billion), according to a report issued by Canada's Venture Capital and Private Equity Association and Thomson Financial. Canadian investors also committed $13.4 billion in the global private equity market in 70 deals. A total of C$8.6 billion was raised across all funds – buyout, venture capital and mezzanine debt. Only $1.69 billion of the total went to venture capital, almost the same as the $1.68 billion invested in 2005. A large portion of the growth was driven by non-US foreign investors, who pumped $3.9 billion – one-third of the total buyout funds raised – into the country. US funds contributed $4.1 billion.

PROVIDENCE CLOSES $12BN FUND
Providence Equity Partners, the Rhode Island-based private equity firm, has closed its sixth fund on $12 billion (€9 billion), after only four months of fundraising. The fund, Providence Equity Partners VI, is nearly triple the size of the previous one, which closed in 2004 on $4.3 billion (€3.3 billion). It attracted a diverse range of investors from university endowments to high net worth individuals, and brings the firm's total assets under management to about $21 billion (€16 billion). Founded in 1990, Providence recently joined Carlyle and Irish publishing group Independent News & Media to invest in the latter's listed media business in Australia and New Zealand.