From the Regulators

FCNB releases capital markets report

By James Langton |

Private and public companies in New Brunswick raised more than $130 million in new capital last year, according to the 2017 edition of the New Brunswick Capital Markets Report published the Financial and Consumer Services Commission (FCNB).

A total of $31 million was invested in local firms by venture capital (VC) firms in 31 deals in 2016, up from $11.6 million in 2015. The bulk of the VC deal activity was in the information and communications technology (ICT) sector, which represented 77% of the total activity. According to the report, 65% of the total capital raised was made in later- and expansion-stage companies; early-stage investments totalled $9.7 million in 2016.

"The amount of venture capital investments in the province is a direct indicator of the strength of our start-up entrepreneurial eco-system and the ongoing development of these companies," says Jeff Harriman, senior analyst, capital markets, at the FCNB, in a statement. "The average size deal has continued to grow, with the average deal in 2016 at $1 million compared to $780,000 in 2015."

In addition, public companies in the province raised a total of $102.7 million in 2016. Of that total, $96.7 million was raised in public markets by just two firms. A healthcare firm raised $73.6 million and a real estate company raised $23 million. The remainder was generated in the exempt market by the same real estate firm.

Over the past five years, $1.45 billion was raised by public and private companies in the province, the report says. The bulk of that amount, $1.14 billion, was raised through the exempt markets, with $231 million generated in the public markets, and $72 million in VC.

In 2016, just $19.5 million was raised through the exempt markets, including $12 million in equity and $7.5 million in debt.

"New Brunswick companies are adopting various alternative methods of financing their operations, including using platforms such as Kickstarter," adds Harriman. "We will continue to follow these new or alternative methods of financing. Future reports will also focus on equity crowdfunding and usage of the Community Economic Development Corporation program."

Equity crowdfunding is not an option that many firms have used so far, the report notes. However, New Brunswickers initiated 239 projects on Kickstarter during 2016. Ninety-six projects were successful, 104 failed, 33 were suspended/cancelled, and six were still live.

New Brunswick's largest companies generated significant merger and acquisitions (M&A) activity during the year, the report notes. "While the number of M&A deals decreased this year, M&A activity remains strong in the province with more than 85 deals occurring in the past five years," it says.