April 27, 2015 / 4:03 AM / 4 years ago

Canadian private equity and venture capital deals surge in first-quarter

TORONTO (Reuters) - Acquisitions and financing deals led by private equity and venture capital firms surged in Canada in the first quarter, Thomson Reuters data showed, with many involving investment in software, information technology and natural resources.

For Canadian private equity buyouts, it was the strongest ever first quarter on record. For venture capital, it was the strongest first quarter in several years.

Announced and closed private equity deals totaled C$6 billion ($4.9 billion) in value in the three months to March 31, according to the data released on Monday.

Software accounted for 13 of the 99 deals in the quarter, but it was Canada’s huge mining, and oil and gas sectors that drew the vast majority of the money invested by private equity firms.

The largest private equity deals during the period included Brookfield Asset Management’s C$1.1 billion purchase of the minority interest that it did not already own in Brookfield Residential Properties.

Others included KKR & Co-backed Veresen Midstream’s C$760 million acquisition of some of Encana Corp’s natural gas holdings as well as Magris Resources’ C$657 million acquisition of Iamgold Corp’s Niobec mine, a deal that was backed by Temasek Holdings and CEF Holdings.

Venture capital investment activity in Canadian companies also grew at a strong pace, with C$548 million invested in 137 deals, a 41 percent increase from a year ago and a 10 percent increase in the number of financing rounds.

This amount was the greatest invested since the first period of 2007, while the number of companies was the highest since the first quarter of 2005.

Despite this growth, average deal sizes in Canada lagged those in other countries. Of the world’s top ten nations by number of venture capital financing deals, Canada’s average round size of C$4 million in the first quarter ranked last, while the United States topped the list at C$16.2 million, the data showed.

The information technology sector attracted 55 percent of the venture investment in the quarter. Toronto-based Varagesale’s C$34 million capital raising, backed by Lightspeed Management and Sequoia Capital was the biggest deal in the period.

That deal was closely followed by Kitchener, Ontario-based Miovision’s C$30 million capital increase backed by the likes of MacKinnon, Bennett & Co, Investeco Capital, and others. Toronto-based sports app company, theScore’s C$26.6 million deal backed by Relay Ventures rounded off the top three spots.

editing by Jane Baird

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