Canadian private capital continued to climb in 2015, according to findings from the Canadian Venture Capital and Private Equity Association (CVCA).
The CVCA’s recent reports say venture capital activity saw amounts invested and fundraising increase, with exit values reaching historical highs. As well, private equity saw solid fundraising numbers and large increases in volume.
Venture capital investment continued to gain in 2015, with 536 deals capturing $2.3 billion. That’s an increase of 24% and 12%, respectively, over 2014. The gain was primarily driven by three large IPOs (Shopify, ProNAi and Davids Tea). Also, exit values were reached a record of $4.3 billion in 2015, compared with $1.5 billion in 2014 and $1.3 billion in 2013. See the full VC report.
Ontario continued to lead all provinces in terms of venture capital investments, accounting for 38% and 42% of deal numbers and disbursement, respectively. Quebec investment activity was up dramatically in 2015, increasing its national share of venture capital activity to approximately 31%.
In particular, Health and Life Sciences activity drove growth in 2015, up 39% in deal volume and 35% in dollar terms, compared to 2014.
“Venture capital investment is going through a much-needed resurgence in Canada”, says Mike Woollatt, CEO of the CVCA. This is “thanks in large part to government activity on the fund of funds side.”
Meanwhile, private equity saw a 19% increase in deal volume over 2014, with 399 deals in 2015. This was largely thanks to the 2014 Tim Horton’s deal, which represented $11.8 billion.
But, overall, deal values in 2015 were down from the $42.2 billion record in 2014. Despite this, they still reached a historically high value of $22.8 billion—Quebec also saw a substantial increase in private equity activity in 2015, with $5.4 billion invested over 151 deals. Read the full PE report.
Impact of oil dip
The impact of the low oil prices was felt in 2015, as the number of deals and the amount invested in oil and gas declined from 82 deals and $13.1 billion in 2014, to 48 deals across $8.6 billion in 2015. While oil and gas remains the highest in terms of amount invested, it’s now fourth in terms of volume after sectors such as industrials and mining.
Also, data collected from a survey of CVCA members shows that the vast majority (67%) agree depressed oil prices will worsen business outlooks for 2016.
In terms of exits, the IPO market for private equity remains slow, representing only $2.5 billion over four deals in 2015. And, M&A exits continue to lead the charge, representing approximately 60% of both volume and overall value. The CVCA member survey reveals the majority (56%) believe 2016 will see a continued decrease in IPO activity.
However, “Private equity investment in Canada is leaping from strength to strength right now, despite the impact of oil and gas prices”, says Woollatt. “We are seeing robust activity in deal volume, amounts invested, and fundraising levels, which bode well for future investments.”
Overall, 2015 has been a strong year for both venture capital and private equity, and it’s predicted this will continue into 2016. The CVCA member survey says 64% of respondents believe current economic conditions favour the private capital industry, with 54% agreeing that a lower Canadian dollar improves business outlook for the upcoming year.