Private equity and venture capital deal activity in Canada is on the rise, with first quarter figures showing gains in both types of private investing.
Canada's Venture Capital & Private Equity Association (known for short as the CVCA) said the value of private equity deals in the first three months of the year doubled from last year, jumping to $4.6-billion from $2.3-billion. In private equity, it was a case of bigger deals, as the number of transactions was up only 3 per cent to 77.
In venture capital, the value of deals was up only 2 per cent to $378-million, but the number of deals surged 16 per cent to 122.
The rise in activity is likely to be sustained. Fundraising in both private equity and venture capital has been strong of late, providing managers with a lot of cash to put to work. That is not changing. After a record 2013 for private equity fundraising, managers brought in another $3.5-billion in capital in the first quarter, triple last year's inflows. Venture capital fundraising in the first quarter totalled more than half what funds brought in all last year.
Here are some other points highlighted by the CVCA:
- Two private equity transactions of more than $1-billion, the purchases of Patheon Inc. and Atrium Innovations Inc., accounted for more than half of the value of private equity in the quarter.
- the busiest sectors for private equity were oil and gas, manufacturing and information technology.
- most deal making was done by Canadian funds, which accounted for about three-quarters of the domestic transactions.
- the average venture capital deal was smaller, except in the life sciences sector.
- most of the money in venture capital was in series A rounds, an early stage investment.
- VC funds were busiest in information technology and life sciences, which garnered 87 per cent of the money. In life sciences, human biotechnology was by far the most active sector.