TorQuest holds first close for Fund III

The mid-market firm has collected C$372m for its third fund targeting its domestic Canadian market, which research suggests is the second most attractive region for private equity.

Toronto-headquartered TorQuest Partners has held a first close on about C$372 million (€299 million; $366 million) for its third fund, which launched last year and is targeting C$650 million, according to documents filed with the US Securities and Exchange Commission.

Greenhill and Company is acting as placement agent for the fund, which has received commitments from 30 investors, according to the filing. Limited Partners in Fund III include the Bank of Nova Scotia, the Canada Pension Plan Investment Board and the Ontario Teachers’ Pension Plan. TorQuest closed its second fund on C$550 million in 2006.

Last month, the firm invested an undisclosed sum in display advertising business Array Marketing alongside fellow Toronto-based firms Westerkirk Capital and Northleaf Capital Partners. TorQuest focuses on Canada’s mid-market and typically invests between C$25 million and C$75 million per deal.

The firm’s current C$550 million fund has investments in specialty chemicals company Pinova Holdings, fuel management services business 4Refuel and insurance business SCM. TorQuest has completed 12 platform investments and 39 total acquisitions since its founding in 2002.

The Canadian market, comprised primarily of mid-sized businesses, recently earned the ranking for second most attractive country for private equity and venture capital investments in a new study from the University of Navarra’s IESE Business School. Canada, which shared the ranking with the United Kingdom, scored higher than 77 other countries included in IESE’s Global Venture Capital and Private Equity Country Attractiveness Index. The study evaluated countries based on six key drivers: economic activity, depth of capital market, taxation, investor protection and corporate governance, human and social environment, and entrepreneurial culture and deal opportunities.