Confidence is slowly coming back to Canada's private equity world, and that strength is best felt in the mid-cap space. Just as they did in 2010, deals in the $500-million to the $1-billion range are leading the way.
"Many of the best investment opportunities in Canada are to be found in small and mid-sized businesses that are now ready for rapid expansion, and those that are being spun out of larger corporate entities," noted Gregory Smith, president of CVCA, Canada's Venture Capital and Private Equity Association, and managing partner at Brookfield Financial.
CVCA analyzes trends in the private equity and its latest report tracks first-quarter activity. During that period, two deals dominated: TPG Capital's $846-million acquisition of MDA Corp.'s property data business and Apax Partners' $745-million acquisition of Yellow Media's Trader Corp. unit.
These two mid-cap deals accounted for about three-quarters of all private equity activity last quarter, which continues a precedent theme set in 2010.
CVCA also pointed out that private equity exits look to be a strong theme this year. Fourteen domestic and foreign exits from Canadian businesses were recorded in the first quarter.
While private equity continues to gain traction, Canada's venture capital world is still in the dumps. The U.S. saw $6.1-billion (U.S.) invested in the first quarter, up over 20 per cent from 2010, while only $315-million was invested here.