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Canadian Private Market Recap: Feb 19

  • Posted By: Ann Zhang & Anan Sivapalu

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Market Update

The North American markets rebounded from the decline seen in the prior week. Recent efforts by major oil producers to curb production provided some optimism regarding oil prices. Additionally, the Federal Reserve’s mixed comments on further interest rate increases this year buoyed the markets. The credit markets remain buoyant despite the equity market turmoil seen since the start of the year.

 

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Torys M&A Trends Panel (Paris Aden)

Torys hosted a heavyweight panel discussion on Canadian M&A themes this past Thursday morning.  The panelists included:

·        Bruce Flatt, CEO of Brookfield Asset Management

·        Maureen Jensen, Chair of the Ontario Securities Commission

·        Karrin Powys-Lybbe, Partner at Torys

·        John L. Thornton, Chairman of Barrick Gold

·        Darryl White, CEO of BMO Capital Markets

There was some fascinating discussion and I’ve paraphrased the most noteworthy comments below:

On global money flows, Bruce Flatt noted that global money flows are a key consideration in assessing M&A market conditions and that there have been massive accumulations of capital into the hands of professional fund managers, particularly private market asset classes, such as real assets and private equity.  He added that many fund managers are attracted to the opacity of these private market investments because the positions have relaxed “mark to market” requirements for these holdings.  In the years ahead, Chinese capital accumulation will become increasingly prevalent.  For example, trillions of dollars of capital will be accumulated in the global system as Chinese consumers purchase life insurance products with greater frequency.

On Canadian Cross-Border M&A Activity, Daryl White added that despite the weakening of the Canadian currency from $1.15 to $1.30, Canadian outbound M&A activity was very high.  Of approximately $285 billion of activity in 2015, $240 billion (84%) was Canadian entities acquiring foreign companies.  This outbound activity was dominated by Brookfield, Canada Pension Plan Investment Board and the other large Canadian pension funds. To further highlight the global nature of the M&A market, domestic M&A activity was a very small proportion (under 4%).  Foreign entities buying Canadian companies made up the remaining 12% of activity last year.

On the Canadian M&A Outlook, Mr. White suggested that the odds of 2016 exceeding 2015 are “very good.”  Shareholder activism will continue to be a driver of public market activity.  98 activist campaigns were counted in 2015, a spectacular increase from the three or four per year we saw just a few years ago.  It is estimated that $250 to $300 billion has been allocated to activist funds and that Canada is the #1 target jurisdiction for future activity (yes, that’s ahead of the U.S.) because of a perceived activist-friendly regulatory regime.

If you would like more color on the comments that were made by the panel and what the implications may be for you, don’t hesitate to contact me.

 

Weekly Canadian Private Market M&A Report

Announced Deals

CPPIB acquires stake in British shopping centre for $350 million

Closed Deals

CDPQ invests in Groupe Marcelle’s buy of PE-backed Lise Watier
Newly funded CRG acquires Gibraltar-backed GXMG
VC-backed e-learning platform Talentbuddy acquired by Udemy
CPPIB partners in $555 million buy of Florida seniors housing

Announced Deals

CPPIB acquires stake in British shopping centre for $350 million


Toronto based Canada Pension Plan Investment Board (CPPIB) has agreed to acquire an interest in Grand Central Shopping Centre, a British regional shopping space. CPPIB acquired the stake for $350 million in a 50:50 joint venture with British property development and investment firm Hammerson. This deal is subject to customary closing conditions, including regulatory approval. “We are once again demonstrating our long-term commitment to the U.K., and in particular, to regional markets around the country,” said Andrea Orlandi, Managing Director and Head of Real Estate Investments, Europe, CPPIB.

Closed Deals

CDPQ invests in Groupe Marcelle’s buy of PE-backed Lise Watier


CDPQ has announced its $18 million investment in Groupe Marcelle’s to fund its recent purchase of Lise Watier Cosmétiques, a Montréal-based branded developer and manufacturer of cosmetics, skincare and fragrances sold in department stores and drugstores. The acquisition’s value was not disclosed. David Cape, President of Groupe Marcelle said, “Through this transaction, Groupe Marcelle will become the leading Canadian company in the beauty industry. It brings us one step closer to reaching our ambitious objective of becoming one of the 100 largest global cosmetics manufacturers.”

Newly funded CRG acquires Gibraltar-backed GXMG

Los Angeles-based digital government product company Civic Resource Group (CRG) has acquired Globalive XMG Inc. (GXMG), a Toronto-based developer of software-related augmented reality applications. No financial terms were released. This deal and funding will position CRG to expand in the smart city market. Anthony Lacavera, Founder and Chairman of Globalive Capital, commented, “I like to think big. CRG’s leadership and deep industry experience, coupled with its unified CivicConnect™ data and CivicAR™ mobile Augmented Reality platform present a big opportunity in the massive global Smart City market”

VC-backed e-learning platform Talentbuddy acquired by Udemy

Canadian online web development school Talentbuddy has been acquired by Udemy, a San Francisco-based marketplace for teaching and learning online. No financial terms were disclosed. Founded in 2013, Vancouver-based Talentbuddy was backed by Canadian venture capital firms Version One Ventures and BDC Capital, Canadian accelerator HIGHLINE, and others. Udemy, which was founded in 2010, is also venture-funded. This transaction will provide Talentbuddy the opportunity to continue to enable millions of students to build their programming skills using interactive learning experiences.

CPPIB partners in $555 million buy of Florida seniors housing

Canada Pension Plan Investment Board (CPPIB) and Toledo, Ohio based Welltower Inc. (NYSE: HCN) have formed a joint venture to buy a 97.5 percent interest in a portfolio of seniors housing properties in Florida, known as Aston Gardens. The purchase price for the interest was US$555 million. With the deal’s closing, CPPIB owns 45 percent of the joint venture, while Welltower Inc. owns the rest. Peter Ballon, Head of Real Estate Investments Americas, CPPIB, commented on the deal, “This portfolio is well-positioned to benefit from long-term demographic trends and is an attractive entry into the U.S. seniors housing sector for CPPIB.”

 

 

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