REUTERS / Mark Blinch
CANADIAN PRIVATE EQUITY BUYOUT REVIEW First Quarter 2016
Table of Contents Canada’s PE Buyout Market in Q1 2016 $ Invested and # Companies Financed Top Buyout Deals Canada by Market Segment Canada by Sector & Province Canadian Investments Abroad Buyout Funds Raised Public and M&A Exits Explanatory Notes & Contacts
3 5 9 10 12 14 16 17 18
Overview of Canadian PE Buyout Market Activity in Q1 2016 Canadian buyout-PE market trends Deal-making activity in Canada’s buyout and related private equity (PE) market showed a marked decline in the first quarter of 2016. Disclosed values of transactions (announced and completed) totaled $4.7 billion as of March 31st, down 22% in dollar terms from the year prior. A total of 59 deals were done in the first three months, the fewest deals in a first quarter since 2010. Top deals included CDP Capital’s $2.0 billion investment in Bombardier Transportation, Highbridge Principal Strategies & Hawthorn Equity Partners’ investment in GFL Environmental, and NRDC Equity Partners investment in Hudson’s Bay Company for its acquisition of luxury retailer Gilt Groupe Holdings. At the end of March, the two largest transactions sized $500 million or greater captured 61% of all disclosed disbursements made in the Canadian market. Deals sized between $100 million and $500 million took the second largest share of the total, or 25%, while deals sized less than $100 million accounted for the balance. Canadian market trends by sector Canadian manufacturing companies accounted for the largest share of buyout-PE deal-making last quarter with 9 transactions in Q1, or 15% of the national total. Consumer-Related and business services companies both followed a close second with 7 deals apiece, with mining and healthcare & life sciences companies both came in third place with 6 deals in each sector. When measured by disclosed deal values, manufacturing and energy & environmental companies dominated the largest transactions with $2.2 billion and $817 million respectively. IT & media and consumer-related companies followed closely behind with $463 million and $457 million respectively.
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Overview of Canadian PE Buyout Market Activity in Q1 2016 Canadian market trends by region The majority of buyout-PE transactions (announced and completed) in the Canadian market in Q1 2016 involved businesses that were located in Québec (42%) and Ontario (31%). However, only the province of British Columbia demonstrated any growth over Q1 2015, with 5 deals in Q1, a 66% increase. The number of deals done declined substantially in Québec (47%), Alberta (64%), and Ontario (45%). Though the number of deals done in Québec declined in the first quarter, the province attracted the bulk of the largest deals, securing $2.3 billion. Ontario-based companies attracted the second largest share, with $1.6 billion. Though British Columbia saw growth in its number of deals, half had undisclosed values this quarter, leaving the province with only $124 million of disclosed disbursements. Canadian investor activity in global markets Canadian buyout and related PE funds were substantially less active in international transactions in the first quarter relative to the year before. As of March 31st, Canadian funds led or participated in a total of 20 deals in other countries, and these were valued at approximately $17 billion. This compares against a total of 36 deals valued at $30.5 billion reported in the first quarter of 2015. Topping the list was San Diego-based Petco, which was acquired in a $6.3 billion LBO by CPPIB and CVC Capital Partners. Trends in Canadian buyout-PE fund-raising The fundraising activities of Canadian buyout funds maintained very strong levels in the first quarter of 2016 with a total of $14.3 billion of new capital committed, already exceeding the $11.1 billion raised in all of 2015.
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Buyout – PE Deal Values in Q1 Reach $4.7 Billion Down 22% From Q1 2015 $35 $31.0
Deal Value (CAD Billions)
$30 $25 $22.5
$20 $15 $12.0
$11.7
$10.5
$10 $4.7
$5 $0 2011
2012
2013
Q1
Q2 5
2014 Q3
2015
2016
Q4
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Buyout - PE Deal Volumes Down 43% From Q1 2015 Fewest Deals in a Q1 Since 2010 500 429
450
412
Number of Deals
400 350
300
333
341
303
250 200
150 100
59
50 0 2011
2012
2013
2014
Q1
Q2
Q3
6
2015
2016
Q4
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Slowdown in PE Dealmaking More Pronounced Than in Conventional M&A in Canada 450
429
35%
412
400
30%
333
Number of PE Deals
350
341
303
25%
300 250
20%
200
15%
150 10%
100
59
50 0
5% 0%
2011
2012
2013
Number of PE Deals
7
2014
2015
Q1 2016
% of M&A Activity
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Canadian Investors Lead 72% of Deals in Q1 2016 Up From 70% In 2015 500 429
450
412
Number of Deals
400 333
350
300
341
303
250 200
150 100
59
50 0 2011
2012
2013
Foreign Lead Investor 8
2014
2015
Q1 2016
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Top Canadian PE Buyout Deals First Quarter 2016 Province
Value (CAD $ Millions)
Disclosed Investors
Bombardier Transportation
QC
$2,089
CDP Capital
GFL Environmental
ON
$800
Highbridge Principal Strategies, Hawthorn Equity Partners
Hudson's Bay Trading Company
ON
$349
NRDC Equity Partners
Axia NetMedia
AB
$269
Partners Group
Physiotherapy, Rehabilitation and Medical Assessments segment
ON
$250
Audax Private Equity
Ceridian Canada
ON
$194
Thomas H. Lee Partners, Fidelity National Financial Ventures Group
Premium Brands
BC
$75
Pender West Capital Partners
Company
Centric Health Corp
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Top Two Buyout-PE Transactions Take 61% of Dollars # of Deals Done
Dollars Invested (Disclosed)
> $1 Billion
1
$2,089 Million (44%)
$500 Million - $1 Billion
1
$800 Million (17%)
$100 Million - $500 Million
5
$1,169 Million (25%)
$10 Million - $100 Million
13
$517 Million (11%)
< $10 Million
19
$89 Million (2%)
Deal Values Undisclosed
20
$0 (0%)
Deal Size Range
Total Deals With Disclosed Values: 39 (of 59) Total Invested: $4.7 Billion
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Manufacturing & Consumer Companies Lead in Q1 2016 With 15% & 12% of Deals Total Deals: 59 Manufacturing Consumer Related Business Services Mining Healthcare & Life Sciences Oil & Gas Transportation Software Finance Energy & Environmental IT & Media Construction & Engineering 0
1
2
3
11
4
5
6
7
8
9
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Manufacturing, Energy & Environmental Investments Drive Deal Values in 2015 Total Deal Values: $4.7 Billion Manufacturing Energy & Environmental IT & Media Consumer Related Oil & Gas Healthcare & Life Sciences Mining Business Services Finance Transportation Construction & Engineering Software $0.0
$0.5
$1.0
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$1.5
$2.0
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$2.5
Sharp Declines in Deal Volumes Across All Regions but British Columbia 50 45
# of Deals
40
35 30 25 20 15 10 5 0 British Columbia
Alberta
Ontario
Q1 2015
13
Quebec
Rest of Canada
Q1 2016
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Canadian PE Investment Strong Beyond Canada Deal Volumes Down 44% From Q1 2015 150
$41.2
125
$40
$34.3
$35
100
$30.5 $30 $25
75
$20
$17.0 50
$15
$10.3 $10
25
$5.3 $5
$2.2
$1.4
$0
0
Q1'14
Q2'14
Q3'14
Q4'14
Q1'15
Q2'15
Total Deal Values, Including All Investors
14
Q3'15
Q4'15
Q1'16
# of Deals
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Canadian Investors, Non-Canadian Companies
$44.5
$45
# of Deals
Amount Invested (CAD $ Billions)
$50
Canadian Funds’ Investments Abroad Top Deals: First Quarter 2016 Rank
Company Name
Deal Value
Location
Industry
Canadian Investors (Disclosed)
(C$ Bil)
San Diego, CA
$6.3
Consmer Related
CPPIB
New York, NY
$3.8
Real Estate
Brookfield Asset Management
Isagen SA ESP
Columbia
$2.8
Electric Utilities
Brookfield Asset Management
University House Communities Group
Dallas, TX
$2.0
Real Estate
CPPIB
1
Petco
2
Rouse Properties
3
4
15
Canadian PE Exits Doubled From Q1 2015 Trade Sales Comprise 77% of Exits 25
# of Exit Events
20
15
10
5
0
Q1'14
Q2'14 IPO
Q3'14
Q4'14
Q1'15
Financial Sale 16
Q2'15
Q3'15
Q4'15
Q1'16
Trade Sale
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Canadian Buyout-PE Fundraising Sees Excellent Start to 2016 Funds Raised (Billions of $ CAD)
$18.0
$16.1 $16.0
$14.7
$14.3
$14.0 $12.0
$12.2 $11.1
$10.0 $8.0 $6.0 $4.0
$2.0 $0.0
2012
2013
2014 17
2015
Q1 2016
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Explanatory Notes 1.
Data collected and analyzed by Thomson Reuters for this statistical report were drawn from a variety of sources. These include Thomson Reuters M&A databases, regulatory filings, and public and proprietary sources among the members of Réseau du capital d’investissement du Québec and other Canadian and non-resident fund managers responding to Thomson Reuters’ quarterly surveys.
2.
All current and previous years data is as of Monday, April 25th, 2016. Data is continuously updated and is therefore subject to change.
3.
All figures are in Canadian dollars unless otherwise noted.
4.
Key statistical indicators (e.g., total disbursements, per quarter or per annum) are influenced by the fact that a substantial fraction of buyout and other PE deals are not fully disclosed. For instance, “dollars invested” in a given period pertain only to those deals with values that have been published or confidentially disclosed to Thomson Reuters.
5.
The data also highlight the deal-making of Canadian funds in non-Canadian companies. “Dollars invested” pertain to the total value of disclosed deals in which Canadian funds have participated and not the specific Canadian financial contributions to these deals.
6.
Statistical data reflect all essential forms of buyout-PE deal-making, including control-stake acquisitions of businesses, minority equity investments, restructuring and special-situations transactions, mezzanine deals over $3 million, and other quasi-equity investments.
7.
For further information on Thomson Reuters venture capital and private equity offerings, please visit us at: http://thomsonreuters.com/financial/venture-capital-and-private-equity/
8.
For further reports on private equity, venture capital, and other asset classes, please visit us at:
http://dmi.thomsonreuters.com/DealsIntelligence/QuarterlyReviews 9.
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