New Brunswick’s capital markets, like the province’s economy itself, are experiencing significant ups and downs. The roller-coaster ride is not new – and it is not likely to end any time soon.

Between 2011 and 2015, more than $1.46 billion was raised by New Brunswick companies, according to the 2016 Capital Markets Report from the province’s financial services regulator, the Financial and Consumer Services Commission (FCNB). More than $62 million of that money was raised by venture capital (VC), which has experienced the view from both the top and the bottom of the roller-coaster.

For example, the number of VC deals declined last year, but the value of those deals climbed. The upward swing, however, may be a one-off. “The increase in deal size was due to four early-stage New Brunswick companies that received deals worth between $1 million and $2.5 million,” says Jeff Harriman, the FCNB’s capital markets specialist, education and communications division.

Another significant increase for VC in New Brunswick last year: later-stage VC investment grew by more than 127% to $2.25 million. Still, this amount remains below the five-year average of $4.8 million.

Mergers and acquisitions (M&As) had a similar up-and-down year. New Brunswick firms were purchasing companies for a total acquisitions price tag of $769.25 million, Harriman notes. But, in 2015, M&As dropped to $125.28 million, down from $372.02 million in 2014.

The most recent economic outlook from the Ottawa-based Conference Board of Canada predicts that New Brunswick’s economy will contract by 0.4% this year. If that forecast holds true, it will mark the fourth year of negative economic growth for New Brunswick in the past eight years.

The predicted decline follows a year in which New Brunswick’s gross domestic product growth led the Atlantic provinces. This year, however, the mining, manufacturing and construction sectors are sluggish, according to the most recent provincial outlook from Royal Bank of Canada, which is forecasting only 0.5% growth for the province in 2017.

The New Brunswick government is attempting to address the province’s economic woes through its Strategic Program Review, which has identified $589 million in expenditure reductions and new revenue (including a 2% increase in the corporate tax rate).

Liberal premier Brian Gallant’s government is trying to jump-start new business with its small-business investor tax credit. Last year, this credit was increased to 50% from 30% of the amount invested. The FCNB report found this increase had “an immediate impact on New Brunswick’s capital markets.” The total capital raised in 2015 using the program grew to $32.17 million, a 116.9% increase over 2014.

Of course, in New Brunswick, what goes up must come down.

© 2016 Investment Executive. All rights reserved.