Canada: Not just the 51st state

After a record year in 2012, Canadian private equity activity has slowed down noticeably in 2013.  

Preliminary first-half data from Dealogic show that the combined value of buyouts in Canada was down 73 percent year-on-year, even though the number of private equity deals increased slightly. 

Canada’s lower mid-market generated the vast majority of deal activity during the first quarter of the year, according to Canada’s Venture Capital and Private Equity Association. Of the buyout transactions with disclosed deal values, about 76 percent were valued at C$25 million (€18 million; $24 million) or less.

Meanwhile fundraising in Canada remains flat compared to 2012, with a total of $1.1 billion committed to ten partnerships during the first quarter of the year. At press time, mid-market investor TorQuest Partners, led by managing partners Brent Belzberg and Eric Berke, was expected to close its Fund III on about C$530 million, according to a source familiar with the matter. The fund has a target of C$550 million. 

Onex Corporation, the large-cap investor listed on the Toronto Stock Exchange, is also in market with its Fund IV, which launched earlier this year with a $4.5 billion target. 

The backdrop to this sluggish activity is a domestic economy that, like the US, has struggled to grow. “The Canadian economy has been mediocre,” says Avery Shenfeld, chief economist at CIBC, the Canadian Imperial Bank of Commerce. “Overall growth over [the past 12 months] has been roughly in line with the US, so around 1.5 percent or so.”