Strong Fundraising Performance in the Canadian Private Equity Industry - March 2014

by Christopher Hardy

  • 17 Mar 2014
  • PE

Canada’s private equity industry has seen continued growth in recent years. Funds raised that have a geographic focus on Canada, either exclusively or as a part of a wider investment focus, have been strong in terms of fundraising for the past two years, with 2012 fundraising reaching a record-breaking year of $21bn raised by funds closed in the year (largely due to the $13bn Blackstone Real Estate Partners VII) and funds reaching a final close in 2013 raising $13bn. If real estate funds are discounted, 2013 fundraising ranks as the best year in terms of total capital collected since 2007.

The narrative for the Canadian private equity market seems largely to be a story of a return to pre-crisis levels. Indeed, Preqin’s Funds in Market online service shows that 2014 is well on track to be a strong year for fundraising focused on the region, with over $1bn already garnered in the year to date. While many of the funds included in these totals will be global funds that invest in North America as a whole and largely focus on opportunities in the US, there is still a statistically-supported trend of growth in the Canadian market in recent years. Funds closed in 2013 with a sole focus on Canada raised just under $2.5bn, a 20% increase from the year before.

Buyout funds that focus on Canada as part of a wider geographic focus had one of the best years on record in terms of fundraising, with eight funds raising a total of over $4bn, the largest amount since 2006. Natural resources (including timber) funds targeting Canada also saw the largest amount of capital raised since 2003, with six of these vehicles garnering an aggregate $3.3bn after a barren year in 2012. The Canada-focused venture capital industry is one of the only areas that has not seen an increase in fundraising figures, with four vehicles in 2013 raising a total amount of only $366mn, compared to over $1.2bn by funds raised in the year before. Interestingly, the largest exclusively Canada-focused private equity funds currently in market are both venture capital-focused: Annapolis VII is an early stage venture capital fund that targets oil and gas companies, and Northleaf Venture Catalyst Fund is a fund of funds vehicle that targets domestic-focused early and mid-stage venture capital funds, and also has an allocation to direct investments into Canadian start-ups. Both vehicles are seeking to raise CAD 300mn.

The promising fundraising market in Canada seems set to continue, with 44 funds currently in market seeking to raise just shy of $19bn in total. Twelve of these funds have already held a first close, collectively securing $6bn of commitments, forming a healthy base of capital and suggesting that 2014 will be another strong year for the Canadian private equity industry. 

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