Although venture capital (VC) investment activity in Canadian companies for 2016 thus far has seen its best results in more than 10 years, there has been a significant decline in deals made within Canada’s buyout and related private equity (PE) market.
A total of $2.5 billion was raised for 446 deals in Canada’s VC market in the nine months ended Sept. 30, according to a report released by Thomson Reuters Corp.’s Canadian arm on Wednesday. This represents the best first nine months in dollar terms since 2001, while the number of deals is at its highest level since 2005.
Growth was driven by large-capitalization VC deals in which 11 companies raised rounds of $50 million or more in the first nine months.
Activity for Montreal-based companies placed first among Canadian urban centres and came in 11th place among North American VC-attracting cities. Three Montreal-based companies were in the top seven domestic firms that received the most funding. This includes Blockstream Inc., a blockchain technology company, which saw $75.8 million in funding in the nine months ended Sept. 30.
Toronto (13), Vancouver (20) and Kitchener-Waterloo, Ont. (21) all moved up one or more positions from the ranks they in 2015. Kitchener-Waterloo is the home of Thalmic Labs Inc., which produces wearable technology and received the most funding with $158.4 million in the first three quarters of this year.
Canada’s buyout and PE market has not fared as well in terms of increased activity. Disclosed values of transactions totalled $14.3 billion as of Sept. 30, a decrease of 26% from the prior year. A total of 229 deals were completed in the first three quarters, which is the fewest number of deals in that period since 2010.
Canadian oil and gas companies continue to beat all other sectors, with 38 transactions that collectively raised $3.6 billion.
Canadian buyout and related PE funds were substantially less active in international transactions in the nine months compared with the corresponding period in 2015.
Specifically, they led or participated in 83 deals, collectively raising $70 billion in 2016 thus far. This is far below the 109 deals worth $108 billion that were made in the first nine months of 2015.
Nevertheless, 2016 still represents the second strongest year-to-date on record for Canadian PE funds investing abroad, the PE report notes.
Both Thomson Reuters’ VC report and PE report are available online.
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