businessman documents smart phone digital tablet graph business diagram

Canadian private equity (PE) investment rallied in the second quarter, while venture capital (VC) had a record quarter, according to new data from the Canadian Venture Capital and Private Equity Association (CVCA).

The industry trade group reported that PE investment reached $3 billion in the second quarter, pushing the first half total to $4.9 billion.

While PE deal value was up 54% compared with the first quarter, it still came in 63% lower than the same quarter last year.

Indeed, despite the second quarter surge, PE deal value for the first half was at its lowest level since the CVCA began collecting data in 2013.

“The first half of 2019 has seen a slowdown in PE dollars invested in Canadian and other markets including the United States,” Kim Furlong, CEO of the CVCA, said in a statement.

There was just one big PE deal (over $500 million) in the second quarter, and two thirds of the deals were worth less than $25 million, the CVCA reported.

The industrial and manufacturing sector led the way in Q2 deal activity, accounting for 21% of deals, followed closely by the tech sector at 20% market share.

While PE investment was weak in the first half, the CVCA reported that VC investing had a record quarter, reaching $1.28 billion in Q2, pushing the first half total to $2.15 billion.

The Q2 results edged out the previous record of $1.25 billion in the fourth quarter of 2018, and first half investment also surpassed last year’s high of $1.67 billion.

The tech sector accounted for over half (54%) of the VC deal activity in the first half, followed by life sciences, with a 27% share, and agribusiness at 11%.

The CVCA also reported that there were 20 VC-backed exits in the first half, totalling $2.1 billion.

“Canadian VC-backed exits are on a positive trajectory in 2019 which, in tandem with invested VC dollars, exhibit a healthy innovation ecosystem,” said Furlong. “We’ve heard time and time again that Canada is experiencing a ‘moment,’ and the results we are seeing in H1 2019 is a testament to that.”

As for PE exit activity, the CVCA reported that there were only 15 M&A exits in the second quarter, totalling $851 million.

Looking ahead, the CVCA also noted that there are at least two pending major deals — including the planned privatization of WestJet Airlines Ltd. — which is expected to boost PE activity in the second half.