Buyout and related private equity market activity in Canada took significant strides forward in 2011, with a record number of deals, and dollar flows reaching their highest levels in three years, according to CVCA Canada.

Disclosed buyout-private equity market disbursements in Canada totaled $11.5 billion last year, up 69% from 2010. In addition, announced and closed transactions, totaling 235 in 2011, grew 38% year over year.

Domestic deal volume was the highest on record, topping the previous record of 229 transactions in 2007.

“Private equity investment made sizeable gains in 2011 and helped further economic recovery in Canada,” said Gregory Smith, president of the CVCA and managing partner of Brookfield Financial Corp. “Not only did we see the return of large-cap deals backing major firms in growth mode, we saw record levels of mid-market investment.”

Smith added: “As the overall economy continues to shift gears in the months ahead, the evidence from 2011 suggests that private equity deal-making is playing a vital role in spurring Canadian business investment, expansion and employment creation.”

Another key factor to the higher 2011 values were the largest transactions completed since 2008, including the $2.1 billion acquisition of Husky International by OMERS Private Equity and Berkshire Partners. The Husky buyout was Canada’s top deal in 2011, and one of the largest on a North America-wide basis.

The report found Canadian deal-making trends were sustained in Q4 of 2011, with 54 transactions capturing $2.2 billion.

Transactions in excess of $500 million accounted for 52% of total dollars invested in 2011, followed by transactions of between $100 million to $500 million, which made up 32%.

“One of the surest signs of renewed Canadian private equity investment has been its across-the-board growth,” said Smith. “Deal-making gained both breadth and depth in 2011, with dollar flows increasing in virtually all segments of the market. This trend was also reflected in the domestic firms.”

While Canadian buyout and private equity funds were somewhat less active in global markets in 2011, investment abroad accelerated in the year’s final months. Fourth quarter activity totaled $11 billion, the highest since early 2010.

Leading that activity was the US$6.1 billion acquisition of Kinetic Concepts by Apax Partners, CPP Investment Board and PSP Investment Board, as well as the US$1.6 billion acquisition of 99 Cents Only Dollar Stores by Ares Management and CPP Investment Board.

Canadian funds led or participated in 42 international transactions, totaling $19.9 billion, last year.

“Canadian large-cap and mid-cap funds continued the search for value opportunities around the world in 2011, and appeared increasingly to be finding them as the year unfolded,” said Smith. “In the process, they confirmed their role as global deal-leaders, and as essential drivers and shapers of market trends in the United States, Europe, and other venues.”

Exits from portfolio companies by private equity funds were 25% below the record high established in 2010, but activity exceeded all prior years.

Strategic sales continued to account for the lion’s share of exits, making up 68% of the total. Three Canadian exit-related acquisitions were among the 10 largest in North America in 2011, including Teachers’ Private Capital’s $1.32 billion sale of its stake in Maple Leaf Sports and Entertainment to Bell Canada and Rogers Communications in Q4.

“The continuing high volume and values of liquidity events will have important spillover effects for Canadian private equity investment in 2012,” said Smith.

At year’s end, the total of new capital raised by private equity funds reached $3.6 billion, edging out by 10% the $3.3 billion brought into the market in 2010.