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Private equity buyout industry shows signs of recovery in Q1 2010

Date: Wednesday, May 19, 2010
Author: Investment Executive

Investment and fundraising levels that were up in the first quarter as Canada’s buyout industry demonstrated signs of recovering from the global economic slowdown, according to figures released Tuesday by CVCA – Canada’s Venture Capital and Private Equity Association together with research partner, Thomson Reuters.

In this regard, the Canadian buyout industry’s experience has mirrored that of its counterparts in the United States and around the world.

“The data indicate that the Canadian buyout market stabilized in Q1, largely as a result of increased investments by Canadian funds both here and abroad,” said Gregory Smith, president of the CVCA and managing partner, Brookfield Financial. “The strong fund raising record of the last three years is now being deployed to take advantage of business opportunities at home and across the globe.”

Canadian funds invested US$415 million in Canada in the quarter while American and other foreign funds invested only US$40 million, down significantly from the US$381 million invested by foreign funds in Q4 2009 and the US$567 million invested in Q1 2009.

In addition to increased activity by Canadian funds at home, Canadian funds invested substantially more abroad in Q1 than in recent quarters. In Q1 2010, Canadians invested US$719 million in companies abroad, which was 45% of the US$1.6 billion invested abroad in the entire 2009 year.

Buyout fundraising remained modest in Q1 2010 with only US$260 million raised, barely 10 per cent of the US$2.8 billion in the whole of 2009.

“With investment levels picking up, Canadian buyout funds are increasingly turning their attention to fundraising from domestic and international sources which will be key to maintaining robust investment volumes going forward,” added Smith.