Canadian buyout investment industry in 2009: Down in dollar terms, steady in
number of deals

TORONTO, Feb. 17 /CNW/ - Canada's buyout industry is performing in line with its peers globally, according to the industry's statistical report released today by the CVCA - Canada's Venture Capital & Private Equity Association and research partner, Thomson Reuters.

In 2009, deal activity in Canada's buyout market continued at a reduced pace, below the relatively strong showing of the past three years. Across the country, there have been 89 completed and pending transactions throughout the year, 41 of which had disclosed values totaling US$2.5 billion.

"Canada's buyout industry proved to be resilient in 2009, reflecting a continuing appetite for mid-market transactions despite volatile public markets and a tighter credit environment," said Gregory Smith, President of the CVCA.

The total number of transactions was down only 25% from 2008, though disclosed disbursements were down by 71% as compared to the year prior, indicating fewer large deals throughout the year. As such, deal activity in Canada in 2009 was roughly comparable to that of 2005, when 70 deals were completed, 27 of which had disclosed values of US$2.8 billion.

In Q4 2009, 19 deals were announced, 13 of which had disclosed values totaling US$0.6 billion. This was comparable to the 24 deals in the fourth quarter of 2008, 10 of which had a disclosed value of US $0.1 billion.

The top deal of the year was the sale of Nortel Networks' Enterprise Solutions Business Unit to Avaya, Inc., a portfolio company of Silver Lake Partners and TPG Partners, for US$900 MM. Also notable was the acquisition of Livingston International Income Fund by the CPPIB and Sterling Partners for US$310 MM.

Despite reduced buyout investment in Canada in 2009, fundraising was still robust, especially considering the three very strong years of buyout fundraising from 2006 through 2008. Eight Canadian buyout funds raised a total of nearly $2.1 Billion in the year, led by Onex Partners III which raised just over $1 Billion in 2009, in addition to the $3.2 Billion it raised in 2008.

"Buyout firms increase the value of small and medium sized companies substantially because they bring strong governance practices to the firms in which they invest," said Gregory Smith. "And as buyout activity increases, the resulting growth fuels increased demand for raw materials, end products and jobs and thus benefits our economy as a whole. Research indicates that over a 5 year period, buyout investors added $25-30 billion in value (GDP) to the Canadian economy and created 114,000 jobs." (http://www.cvca.ca/files/Downloads/CVCA_Report_May_2008_WHY_BUYOUT_INVESTMENTS_ARE_GOOD_FOR_CANADA.pdf)

    
    CVCA
    ----
    

The CVCA - Canada's Venture Capital & Private Equity Association (www.cvca.ca), was founded in 1974 and is the association that represents Canada's venture capital and private equity industry. Its over 1800 members are firms and organizations which manage the majority of Canada's pools of capital designated to be committed to venture capital and private equity investments. The CVCA fosters professional development, networking, communication, research and education within the venture capital and private equity sector and represents the industry in public policy matters.

    
    Thomson Reuters
    ---------------
    

Thomson Reuters is the world's leading source of intelligent information for businesses and professionals. They combine industry expertise with innovative technology to deliver critical information to leading decision makers in the financial, legal, tax and accounting, scientific, healthcare and media markets, powered by the world's most trusted news organization. With headquarters in New York and major operations in London and Eagan, Minnesota, Thomson Reuters employs more than 50,000 people in 93 countries. www.thomsonreuters.com

For further information: To arrange an interview with Gregory Smith, President of the CVCA, contact Lauren Linton, Director of Marketing, [phone], [email protected]