UPDATE 2-Canada private equity deals tumble in quarter

Wed Nov 16, 2011 9:18am EST

* Q3 private equity deals valued at C$1.34 bln, down 40 pct

* Most deals were worth less than C$500 mln

* Number of deals down 19 pct in third quarter

* Fundraising at C$2.7 bln for Jan-Sept, tracks 2010

By Pav Jordan

TORONTO, Nov 16 (Reuters) - The value of Canadian deals funded by private equity tumbled in the third quarter, though the level remained well above the trough reached two years ago, according to an industry report.

Private equity deals worth C$1.34 billion ($1.31 billion), were reported in the quarter, a 40 percent drop from the same period last year.

The report, released on Wednesday, was compiled by the Canadian Venture Capital and Private Equity Association (CVCA) in partnership with Thomson Reuters.

Even so, private equity deal-making has already outpaced 2010 levels, and activity is beginning to approach levels reached in the years leading up to the global economic crisis.

From January through September, there were C$9.1 billion worth of deals in Canada, compared with C$6.2 billion in 2010 and C$4.2 billion in 2009. In 2007, private equity investments touched C$27.2 billion, before dropping to C$16.5 billion in 2008, according to CVCA data.

The number of deals also dropped, with 39 completed in the third quarter this year compared with 48 in the same period last year. Average deal sizes werelower, with most worth less than C$500 million.

"Canadian private equity investment returned to its mid-market roots in the third quarter," CVCA President Gregory Smith said in a statement. "Much of this activity involves acquisitiosn of, or significant equity investments in, small and medium-sized enterprises."

Top deals in the quarter included a C$287 million investment in Laricina Energy Ltd, a Calgary-based company, by the Canada Pension Plan Investment Board (CPPIB) and Lime Rock partners.

Private equity fundraising remained strong, despite bumpy global markets, with C$2.7 billion in new capital commitments going to Canadian buyout, mezzanine and other private equity funds. The figure compares with C$3.2 billion raised in all of 2010.

Buyout and private equity fund realizations, where funds exit investments, were tracking lower in the year-to-date, with just 40 at the end of September, compared with 77 for all of 2010, the CVCA said.

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