Value Unleashed

Market Update

The U.S. equity markets extended gains from the prior week while the TSX marked time. Ongoing concerns about global economic weakness and the expected continuation of easy money policy from European and the Asian central banks fueled the upward swing in the equity markets. Continued positive developments between OPEC and Russia on oil production also added to the momentum seen in the last two weeks.  In the credit markets, mid-market loan pricing got more expensive and total leverage levels decreased last week as a result of a temporary slowdown in loan origination. 

North American Equity Markets: A 10-year View

In the last two weeks, the S&P 500 and the Russell 2000 Composite indices rebounded, approaching cyclical highs. Valuations also increased slightly with the rebound. The TSX Composite remained relatively unchanged from the previous week with a slight increase in valuation. On a U.S. dollar basis, the TSX Composite remained near its cyclical lows; even with the exchange rate recovering near the 74 cent threshold.  

Weekly Canadian Private Market M&A Report

Announced Deals

Finland’s Nokia to acquire venture-backed Nakina Systems
VC-backed Vision Critical to sell consulting arm to PE-backed MARU
OTPP-backed BRG to sell power sports business for $400 million
PSP Investments to buy New England hydroelectric assets for $1.2 billion
IOP sells Roadtrek Motorhomes to Erwin Hymer Group
AIMCo-led consortium to acquire owner of London City Airport
OpenGate to buy Royal Building Products’ window and door unit

Closed Deals

Novacap-backed Laces acquires U.S. bathroom products maker
Stingray buys intelligent media solutions provider Nümedia
Nasdaq closes acquisition of OMERS-backed Marketwired

Announced Deals

Finland’s Nokia to acquire venture-backed Nakina Systems

Finland’s Nokia Corp has agreed to acquire Nakina Systems Inc., an Ottawa-based software company that provides network integrity management solutions. No financial terms were disclosed for the deal, which is expected to close this quarter. Bhaskar Gorti, President of Applications and Analytics at Nokia, said: “The planned acquisition of Nakina is another example of the steps we are taking to build security and privacy into our networks from the beginning. Nakina gives us the ability to address a rapidly increasing threat for our customers.” Nakina Systems has been venture-backed since its founding in 2002. Its current Canadian and U.S. investors include Covington Capital Corp, Export Development Canada and VIMAC Ventures.

VC-backed Vision Critical to sell consulting arm to PE-backed MARU

Vancouver-based pioneer in customer intelligence software and support, Vision Critical Communications Inc., has agreed to spin off its North American research consulting arm in a sale to MARU Group, a British customer intelligence professional services provider. No financial terms were disclosed. Scott Miller, CEO at Vision Critical said: “This transaction enables Vision Critical to deliver a more comprehensive, integrated customer intelligence platform for our customers and upon which strategic partners like MARU/VCR&C will deliver a complete, world-class research consulting experience.” Upon the deal’s closing this quarter, the consulting arm will become a standalone business and strategic partner to Vision Critical.

OTPP-backed BRG to sell power sports business for $400 million

California based maker of sports equipment, sportswear and accessories BRG Sports Inc., has agreed to sell its Action Sports division to Vista Outdoor Inc. for US$400 million. The deal, expected to close within 60 days, is in cash with an earn-out tied to future performance. The business being sold to Vista comprises some of BRG’s leading brands, including the Bell, Giro, Blackburn and C-Preme. BRG said the deal will allow the company to pay down its debt, strengthen its balance sheet, and pursue growth initiatives focused on its Riddell brand. Fenway Partners and Ontario Teachers’ Pension Plan (OTPP) will maintain their investments in BRG, the company said.

PSP Investments to buy New England hydroelectric assets for $1.2 billion

Montreal based Public Sector Pension Investment Board (PSP Investments) has agreed to acquire a New England portfolio of hydroelectric assets totaling 1.4 gigawatts from French gas and power utility Engie Group. The assets, which have an enterprise value of US$1.2 billion, reflect core operational merchant hydroelectric facilities located on the Connecticut River in Massachusetts and the Housatonic River in Connecticut. Guthrie Stewart, Senior Vice President, Global Head of Private Investments at PSP Investments said: “The purchased assets are an excellent fit with PSP Investments’ long-term investment horizon and its strategy to leverage industry-specialized platforms.”

IOP sells Roadtrek Motorhomes to Erwin Hymer Group

U.S. private equity firm Industrial Opportunity Partners (IOP) has sold its portfolio company Roadtrek Motorhomes Inc., a Kitchener, Ontario based designer and manufacturer of motor homes, to Erwin Hymer Group. No financial terms were released. Roadtrek makes Class B motor homes and sells them through a network of recreation vehicle dealers in the United States and Canada. Erwin Hymer is a caravan and motor home manufacturer with headquarters in Bad Waldsee, Germany. Ken Tallering, a Senior Managing Director of IOP said: “We believe Erwin Hymer Group’s industry experience and long-term investment strategy suits the Company well, and IOP expects Roadtrek will continue to grow and thrive under Erwin Hymer Group’s ownership.”

AIMCo-led consortium to acquire owner of London City Airport

A group of investors led by Alberta Investment Management Corp (AIMCo) has agreed to acquire the company that owns and operates London City Airport. No financial terms were released; however, Reuters previously reported the value of asset to be about £2 billion ($3.8 billion). AIMCo, the Ontario Municipal Employees Retirement System (OMERS), Ontario Teachers’ Pension Plan, and an affiliate of Kuwait Investment Authority are jointly buying London City Airport from Global Infrastructure Partners (GIP) and Highstar Capital. GIP acquired a majority stake in the asset in 2006. A spokesperson for the Consortium said: “Our investment and support will foster a mutually beneficial relationship between the airport and its airlines, passengers and employees, while ensuring a positive economic impact for all of London and the local community, in particular.”

OpenGate to buy Royal Building Products’ window and door unit

Los Angeles-based U.S. private equity firm OpenGate Capital has agreed to acquire the Window and Door division (Royal W&D) of Royal Building Products, a maker of vinyl window profiles and patio doors based in Woodbridge, Ontario. No financial terms were disclosed for the deal, which is expected to close next month. The seller is Axiall Corp (NYSE: AXLL), which is divesting Royal W&D to focus on its core business. Royal W&D has been operational for more than 40 years and currently has seven manufacturing sites in Canada and the United States.

Closed Deals

Novacap-backed Laces acquires U.S. bathroom products maker

Montreal-based Laces Group, a portfolio company of Canadian private equity firm Novacap, has acquired most of the assets and operations of Zenith Products Corp, a maker of bathroom furniture, fixtures and accessories based in New Castle, Delaware. No financial terms were released for the deal, which will see Zenith’s management and operating team remain in place. Laces, a Canadian home fashion products specialist, said the acquisition gives it manufacturing capabilities in the United States as well as an expanded product range. Laces operates through its Maytex subsidiaries in the United States and through Banyo-Decolin in Canada.

Stingray buys intelligent media solutions provider Nümedia

Montreal-based technology-focused content provider and broadcaster Stingray Digital Group Inc. (TSX: RAY.A, RAY.B) has bought Nümedia, a Montréal-based provider of intelligent media solutions that enable in-venue music, experiences, communication, engagement and activation. The acquisition is valued at $2 million. Eric Boyko, President, Co-founder, and CEO of Stingray. said “The acquisition of Nümedia will enhance our competitiveness and confirm our leadership position in the field of in-store media solutions.” Stingray raised $179.5 million in an initial public offering in mid-2015. It continues be a portfolio company of Canadian private equity firm Novacap, Telesystem and other investors.

Nasdaq closes acquisition of OMERS-backed Marketwired

Nasdaq (Nasdaq: NDAQ) has closed its acquisition of Marketwired LP, a Canadian provider of news distribution services and analytics for communications professionals. No financial terms were disclosed for the previously announced deal; however, an earlier report said it could value Marketwired for as much as US$200 million. The deal expands Nasdaq’s position as a leading, global corporate services provider. The transaction provides an exit to OMERS Private Equity, which has backed the company since 2006. It also provides an exit to Manulife Capital, which was a minority investor in Marketwired over the same period.