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Not only are Canada’s major buyout players going big overseas, but a progressively greater amount of M&A activity in this country is coming from the private equity world.Nathan Denette/The Canadian Press

Canadian private equity and venture capital firms played a bigger role in international deals last year, while also making up a larger slice of the deal market at home.

The country's private equity and buyout funds worked on 137 deals abroad in 2015, which was more than ever before, according to data from Thomson Reuters. But they weren't always looking far afield – more than 60 per cent of those deals were investments in U.S. companies.

The large Canadian pension funds drove a lot of this activity, accounting for eight of the 10 largest investments abroad. Some of the biggest buyouts included the Canada Pension Plan Investment Board's acquisition of General Electric Co.'s private equity lending arm, Antares Capital, and a deal for PetSmart Inc. that included the Caisse de dépôt et placement du Québec. Other significant investors include Onex Corp. and companies connected to Brookfield Asset Management Inc.

The largest pension funds have been able to expand their geographical range for investment opportunities as they have increasingly brought management of asset classes such as infrastructure, real estate and private equity in house over the past several years. Of the 10 largest funds in Canada, about three-quarters of assets are now managed internally, according to recent research from Boston Consulting Group.

The venture capital world has also experienced its own foreign investment boost in the past year as non-U.S. foreign investors put more money into the Canadian startup market than ever before. These investors accounted for 12 per cent of the $2.6-billion venture capital put to work in Canada last year.

Meanwhile, more Canadian venture capital funds looked outside the country, with over $1-billion invested in 115 non-Canadian businesses last year – close to three times the amount put to work abroad in 2014. About $388-million of that went to the U.S., while $575-million went to China.

These numbers are more evidence that cross-border mergers and acquisitions have been growing in recent years.

Not only are Canada's major buyout players going big overseas, but a progressively greater amount of M&A activity in this country is coming from the private equity world. In the past five years, the volume of Canadian targets acquired through private equity deals increased to about 27 per cent from less than 15 per cent, and more foreign investors waded into the Canadian deal market.

But these major increases belie the declines in values of announced and completed deals last year over all. The 408 private equity and buyout fund deals in 2015 represented a 29-per-cent decline in value to $20.2-billion from a year earlier, although that still makes 2015 one of the better years for buyouts in the past decade.

There was also much less fundraising done last year for Canadian funds, declining to about $10-billion last year from $14.7-billion in 2014. In the U.S., funds also posted an overall decline in funds raised.

Venture capital investment in Canadian companies was at its highest since 2002, with $2.6-billion invested in 579 businesses last year. That was helped by more large rounds of funding of $25-million or more for several companies. Waterloo's messaging app Kik Interactive Inc. and drone maker Aeryon Labs both did some major fundraising this year.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 2:25pm EDT.

SymbolName% changeLast
BAM-N
Brookfield Asset Management Ltd
+0.48%42
BAM-T
Brookfield Asset Management Ltd
+0.25%56.85
GE-N
General Electric Company
-2.86%174.96
ONEX-T
Onex Corp
+0.71%101.48
TRI-N
Thomson Reuters Corp
-0.31%155.47
TRI-T
Thomson Reuters Corp
-0.52%210.56

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