Canada s Buyout & Private Equity Market in Q Prepared by Thomson Reuters for Canada s Venture Capital & Private Equity Association

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Canada s Buyout & Private Equity Market in Q1 2014 Prepared

1 Canada s Buyout & Private Equity Market in Q Prepared by for Canada s Venture Capital & Private Equity Association

2 Canadian buyout-pe market trends Deal-making in Canada s buyout and related private equity (PE) market increased in the first three months of 2014 particularly in dollar terms. Disclosed values of transactions (announced and completed) totaled $4.6 billion in this period, or effectively double the $2.3 billion in values reported at the same time in The number of deals done between January and March was also slightly higher on a year-over-year basis. Control-stake acquisitions, minority investments and other PE transactions (announced and completed) in the domestic market totaled 77 this time around, up 3% from Q The significant growth in dollars invested in the Canadian market in Q owed to a number of major buyout-pe transactions. These included the final closings of a couple of previously-announced $1 billion-plus deals the take-private acquisition of Mississauga, Ontario-based Patheon Inc., and the acquisition of Québec City-based Atrium Innovations Inc. Other large-sized transactions included a major investment in Tiverton, Ontario s Bruce Power LP, and the buyout of Windsor, Ontario s Jamieson Laboratories Ltd. In the first quarter, the two large-cap transactions accounted for over half (56%) of all disclosed disbursements made in the Canadian market. Deals sized between $100 million and $500 million captured the second largest share, or one-third of dollar flows, while deals sized less than $100 million captured the balance. Trends in the US buyout-pe market Deal-making activity in the American buyout-pe market also expanded substantially in dollar terms in the first quarter of Transactions (announced and completed) in the United States absorbed US$67.4 billion in disclosed values in this period, which is more than triple the amount reported at the same time in Canadian market trends by sector Canadian oil and gas companies took the leading share by the number of buyout-pe transactions (announced and completed) in the first three months of 2014, or 17% of the total. Not far behind was activity in manufacturing and processing sectors, which garnered a 16% share this time around, followed by activity in information and media sectors, which garnered a 12% share. Overview of Canadian Market Activity in Q Of the 77 buyout-pe deals done in Canada in Q1 2014, 55, or 71% of the total, reflected values disclosed to. 2

3 With respect to disclosed dollars invested, domestic market activity was instead led in healthcare and life sciences sectors, which accounted for 57% of the total amount between January and March. In second spot were oil and gas businesses, which attracted close to one-fifth of all disbursements, followed by energy-power and environmental businesses, which attracted a 10% share. Canadian market trends by region By far the largest share of total Canadian buyout-pe transactions (announced and completed) reported in Q involved businesses that were based in Québec (48%). A significant number of deals were also done in Ontario, which accounted for onequarter of the total number, followed by Alberta, which reflected a 21% market share. However, Ontario led domestic market activity in terms of disclosed dollar flows between January and March, accounting for exactly one-half of the overall amount. Québec-based businesses secured a 30% share of disbursements in the first quarter, while Alberta secured a one-fifth share. Canadian investor activity in global markets Year over year, Canadian large-cap and mid-cap buyout-pe funds were generally more active in global deal-making in the first three months of the year. Canadian funds led or participated in a total of 19 transactions abroad in this period, with these reflecting disclosed values of approximately $3.1 billion. This compares against a small number of deals valued at $2.1 billion that was reported at the same time last year. 2 The international market activity of Canadian funds was strongly focused on businesses located in the United States in Q Indeed, between January and March, U.S.-based activity accounted for close to 80% of both transactions (announced or completed) and dollars invested by Canadian funds this time around. Trends in Canadian buyout-pe fund-raising Following record-breaking fund-raising results in 2013, Canadian buyout, mezzanine and other PE firms sustained high levels of market activity in the first quarter of New capital committed to partnerships and other funds totaled $3.5 billion in Q1 2014, which is more than triple the $1.1 billion committed to funds at the same time in New commitments went to a slightly smaller number of Canadian funds this time around. Successful partnership closings and other fund events totaled eight between January and March, compared to the ten fund-raisers recorded the year before. Overview of Canadian Market Activity in Q Data reflect the total value of disclosed international deals in which Canadian funds have participated and not the specific Canadian financial contributions to these deals. 3

4 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Amount Invested ($ Billions) $8 $7 $6 $5 $4 $3 $2 $1 $0 Totaling $4.6 billion, Canadian disbursements rise sharply in Q1 BUYOUT & OTHER PRIVATE EQUITY DOLLARS INVESTED IN CANADIAN COMPANIES 4

5 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Number of Deals Number of Canadian buyout-pe deals also up in first quarter NUMBER OF PRIVATE EQUITY FINANCINGS IN CANADIAN COMPANIES 5

6 # of Deals Annualized Domestic Investors Foreign Investors Canadian buyout-pe funds account for 76% of deals in Q1 CANADIAN BUYOUT-PE DEAL ACTIVITY BY NATION OF LEAD INVESTOR, 2010 Q

7 Oil & Gas Manufacturing IT & Media Finance Transportation Retail Healthcare & Life Sciences Software Mining Hospitality & Entertainment Energy-Power & Environmental Distribution & Wholesale Other Business Services Deal activity led in oil and gas, manufacturing in first quarter CANADIAN BUYOUT-PE DEAL VOLUME BY SECTOR, Q

8 Healthcare & Life Sciences Oil & Gas Energy-Power & Environmental Retail Finance Manufacturing IT & Media Transportation Hospitality & Entertainment Mining Distribution & Wholesale Software Other Business Services $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 Largest transactions located in healthcare, oil & gas sectors CANADIAN BUYOUT-PE DISBURSEMENTS BY SECTOR, Q

Deal Range # of Deals Done Dollars Invested (Disclosed) > $1 Billion 2 $2,560 Million (56%) $500 Million - $1 Billion 0 $0 $100 Million - $500 Million 6 $1,500 Million (33%) $10 Million - $100

9 Deal Range # of Deals Done Dollars Invested (Disclosed) > $1 Billion 2 $2,560 Million (56%) $500 Million - $1 Billion 0 $0 $100 Million - $500 Million 6 $1,500 Million (33%) $10 Million - $100 Million 16 $479 Million (10%) < $10 Million 31 $81 Million (2%) Deal Values Undisclosed 22 $0 (0%) Total Deals With Disclosed Values: 55 (of 77) Total Invested: $4.6 Billion NB: For a discussion of domestic market segments, please see Explanatory Notes #4 & 5 on pg. 18. Large-cap deals take 56% of dollar flows in first quarter CANADIAN BUYOUT-PE DEALS BY MARKET SEGMENT, Q

10 Total Deals in 2013: 319 Total Deals in Q1 2014: 77 2% 12% 5% 21% 38% 18% 48% 1% 4% 25% 26% British Columbia Alberta Manitoba-Saskatchewan Ontario Québec Atlantic Canada Québec leads in number of buyout-pe transactions in Q1 CANADIAN BUYOUT-PE DEAL ACTIVITY BY REGION, 2013 & Q

11 Total Invested in 2013: $10.4 Billion Total Invested in Q1 2014: $4.6 Billion 2% 2% 24% 21% 30% 20% 1% 51% 50% British Columbia Alberta Manitoba-Saskatchewan Ontario Québec Atlantic Canada Ontario accounts for one-half of all disbursements CANADIAN BUYOUT-PE DISBURSEMENTS BY REGION, 2013 & Q

12 Deal Values: Billions of $CAD $350 $300 $250 $200 $150 $100 $50 $ Q Annualized Canada X 10 United States Higher deal values are North America-wide in first quarter BUYOUT-PE DISBURSEMENTS (DISCLOSED) IN CANADA & UNITED STATES, 2010 Q

13 Company Prov. Value Investors Patheon Inc-DPx Holdings BV ON $1,460 JLL Partners, Royal DSM Atrium Innovations Inc QC $1,100 Permira Funds, Fonds de solidarité, Caisse de dépôt et placement du Québec Bruce Power LP ON $450 Borealis Infrastructure Jamieson Laboratories Ltd ON $300 CCMP Capital Advisors, Stockton Road Capital Imaginea Energy Corp AB $300 Lime Rock Partners Canadian International Oil icorp AB $200 Riverstone Holdings LLC Top Canadian buyout-pe deals (disclosed) in Q CAD$ MILLIONS 13

14 Deal Values: Billions of $CAD # of Deals $35.0 $30.0 $ $25.0 $ $17.4 $ $ $ $10.0 $5.0 $ $ Q Total Deal Values # of Deals NB: For a discussion of Canadian activity in global deals, please see Explanatory Note #8 on pg. 19. Canadian buyout-pe funds active in 19 global deals in Q1 GLOBAL BUYOUT-PE DEALS & DISBURSEMENTS (DISCLOSED) INVOLVING CANADIAN FUNDS, 2010 Q

15 Total Invested: $3.1 Billion Total Deals: 19 22% 5% 5% 11% 78% 79% United States Europe South America Other NB: For a discussion of Canadian activity in global deals, please see Explanatory Note #8 on pg. 19. Canadian fund activity abroad strongly focused on U.S. GLOBAL BUYOUT-PE DEAL ACTIVITY INVOLVING CANADIAN FUNDS BY REGION, Q

16 # of Exit Events Q Other Exit IPO/Other Public Buyback Financial Sale Strategic Sale NB: For clarification of Canadian exit activity data, please see Explanatory Note #9 on pg. 19. Strategic sales, public deals, drive exit activity in first quarter BUYOUT-PE-BACKED EXIT INVOLVING CANADIAN BUSINESSES, BY TYPE, Q

17 Funds Raised: Billions of $CAD $18.0 $16.0 $16.1 $14.0 $12.0 $10.0 $8.0 $7.0 $6.0 $4.0 $3.8 $4.9 $3.5 $2.0 $ Q Canadian buyout-pe fund-raising reaches $3.5 billion in Q1 NEW COMMITMENTS TO CANADIAN BUYOUT, MEZZANINE & OTHER PE FUNDS, 2010 Q

18 1) Data collected and analyzed by for this statistical report were drawn from a variety of sources. These include proprietary sources among the members of Canada s Venture Capital and Private Equity Association (CVCA), Réseau du capital d investissement du Québec, and other Canadian and non-resident fund managers, responding to annual and quarterly surveys. 2) The data methodology for this report was developed by and is comparable to other methodologies used to track trends in comparable national and regional buyout and private equity (PE)markets. CVCA and Réseau members have provided invaluable advice to concerning characteristics and issues particular to the Canadian fund management industry and market. 3) All dollar values in this report are represented in Canadian currency unless otherwise specified. 4) Key statistical indicators (e.g., total numbers of deals, 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. Due to strict confidentiality covenants with fund managers, has been able to expand the quantity and quality of data that are disclosed for reporting purposes. This is evidenced in comparisons of North American deal information housed in Thomson One e.g., in 2013, 68% of buyout-pe deals done in Canada reflected disclosed values. 5) For the purposes of this report, Canadian deals with disclosed values are discussed according to their organization in broad segments, including mega-deals (above $1 billion), upper mid-market activity (above $500 million), mid-market activity (below $500 million), lower mid-market activity (below $100 million), etc. 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, and mezzanine and other quasi-equity investments. The data also reflect the activity of PE funds focused on businesses in specific sectors (e.g., infrastructure, mining, oil and gas, etc.). 7) The data highlight the continuous domestic deal activity of key Canadian fund types, including private-independent funds, corporate and institutional captive funds, and retail funds. The activity of foreign investors in Canada is also captured. Explanatory Notes 18

19 8) The data also highlight the deal-making of Canadian funds in the United States, Europe, Asia, and elsewhere around the world. Statistics in this report reflect instances in which Canadian funds have acted as sponsors, co-sponsors or co-investors in deals in nonresident businesses, or have otherwise engaged in direct investments in these. Dollars invested in a given period pertain to the total value of disclosed deals in which Canadian funds have participated (in the case of large-cap deals, typically with foreign partners) and not the specific Canadian financial contributions to these deals. 9) Statistical data pertaining to buyout-pe-backed exit events capture activity involving businesses based in Canada. They do not include exits from non-resident businesses in Canadian fund portfolios. 10) Over time, statistics are subject to continuous change as receives new data and as investors and their portfolio companies elect to disclose further details about transactions. In addition, key indicators might change appreciably in the short term due to the circumstance of pending deals. locates pending deals in the periods in which they are announced, with related data adjusted at the time of deal closings. Explanatory Notes 19

Todd Korol, Reuters. Canadian Private Equity Buyout Review First Quarter 2018

Todd Korol, Reuters. Canadian Private Equity Buyout Review First Quarter 2018 Todd Korol, Reuters Canadian Private Equity Buyout Review First Quarter 2018 Table of Contents Canada s PE Buyout Market in Q1 2018 3 $ Invested and # Companies Financed 5 Investment by Company Location