(Refiles to correct spelling of Venture in first paragraph)
* Dealmaking seen rising in 2011 from 2010-CVCA president
* Most activity likely in midmarket
* Canadian PE firms seen active in global arena in 2011
By Pav Jordan
TORONTO, March 7 Canadian private equity is set
for another strong year in 2011, driven by dealmaking in its
midmarket and an improved fundraising climate, the head of the
Canadian Venture Capital and Private Equity Association says.
CVCA President Greg Smith told Reuters that large Canadian
private equity players will again turn in a strong
"I think we'll have growth in the midmarket arena in
Canada, but we'll see some of the larger transactions happen on
the global arena," Smith said in an interview in Toronto.
About C$4.9 billion ($5 billion) in private equity was
invested in Canada last year, the first rise for the asset
class in three years, with deals like the Canada Pension Plan
Investment Board's C$900 million purchase of a 10 percent stake
in the 407 toll highway near Toronto.
The recovery came as confidence returned to the market
after the global economic crisis, when dried-up credit markets
made it almost impossible to raise new private equity funds.
"With a firming economy, people can be much more
comfortable about forecasts than they could have been 18 months
ago, and that generates comfort in doing deals" said Mark
McQueen, chief executive at Wellington Financial.
Already, more private equity capital has been raised in
2011 than in all of 2010.
Birch Hill Equity Partners closed a fourth private equity
fund in February, raising C$1.04 billion to invest in mid-sized
And private equity management firm Clairvest Group Inc
(CVG.TO) said in January it had its final closing for its
Clairvest Equity Partners IV Limited Partnership. It raised
C$467 million and overshot its original C$400 million target.
Total funds raised in 2010 were C$1.4 billion.
"My sense is that 2011 is going to be a strong year for
private equity...perhaps the strongest since the peak of the
last cycle,"," said Rick Nathan, managing director at
Kensington Capital Partners, a Toronto-based firm with some
C$500 million in capital under management.
Private equity players say now could be an optimum time to
buy, taking advantage of post-recession prices for high quality
assets that tend to get bid up as the economy gathers steam.
New appetite is reflected in the growing number of exits,
where private equity or buyout firms "realize" on investments
made as they built their portfolios.
"While still early, it appears that 2011 will be a good
year to consider selling businesses or pursuing public
offerings -- certainly a better environment than the last few
years," said Andrew Sheiner, a managing director at Onex Corp
OCX.TO, the giant Canadian private equity firm with
diversified investments from movie theaters to healthcare.
"The credit markets have not only returned to normal, they
have in our view overshot their mark. There is a lot of
liquidity in the system and many investors are chasing yield."
As debt becomes cheaper again, buyers borrow more and start
to pay higher prices for companies.
Private equity players say 2011 will prove to have been a
good time to buy as more companies put themselves up for sale
after holding off during a dismal selling environment.
Canadian companies in the middle-market range are likely to
benefit the most, just as they did in 2010, when deals from
$100 million through $500 million made up 45 percent of
"We are seeing more transactions in food and in healthcare,
for example, because people think the demographics for those
sectors will allow the marketplace to expand," said Joe
Telebar, a partner at Ernst and Young and an advisor on private
"This year, we expect to see the return of targeted deal
activity as the tailwinds of 2010 propel leading companies back
into the market."
(Reporting by Pav Jordan; editing by Janet Guttsman)