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Canadian Private Market Recap: July 12

  • Posted By: Andrea Banerjee

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Last week saw a flurry of sales activity from U.S. private equity firms in the Canadian mid-market, including Centerbridge Partners’ announcement that they will buy KIK Custom Products from CI Capital Partners. The market also saw foreign PE-backed add-ons fortifying existing Canadian agencies. High Road Capital Partners will make Toronto-based Ariad a cross-border platform, while the Japanese acquisition of Sid Lee will mobilize the agency's expansion into Asia. In financing news, the Caisse de depot et placement du Quebec has invested $8.2 million for the growth of Montreal’s Fix Auto Canada, and shares of Crown Capital Partners began trading on the Toronto Stock Exchange following a successful IPO. Here are the major deals of the week:

Black Swan Acquires Carmel Bay and Raises $350 Million in PE Investment
Chinese PE Firm Invests $80 Million in Canadian Western Potash
High Road Capital Partners Buys Ariad, Builds Cross-Border Agency
Extendicare Completes $870 Million Sale of Its U.S. Business
Hamilton-Based Phoenix Dental Laboratory Acquired by PE-Backed MicroDental
Centerbridge Partners Will Buy KIK Custom Products from CI Capital
Montreal Marketing Agency Sid Lee Acquired by Japan’s Kyu
Fulcrum Capital’s Fund V Closes Above Targets at $344 Million
Fix Auto Canada Receives $8.2 Million in Funding from Caisse de Depot
Crown Capital Partners Raises $65 Million in IPO

M&A

Black Swan Acquires Carmel Bay and Raises $350 Million in PE Investment

Calgary-based private energy company Black Swan has closed its previously announced purchase of Carmel Bay Exploration for approximately $200 million paid in cash. Carmel Bay is an oil and gas exploration company based in Calgary, Alberta. The deal includes 82, 600 acres of working interest lands in the Montney fairway in British Columbia. Black Swan also received $350 million in follow-on investment from PE backers including the Canada Pension Plan Investment Board, KERN Partners and Warburg Pincus. It has raised $850 million in total to date.

Chinese PE Firm Invests $80 Million in Canadian Western Potash

Vancouver-based potash company Western Potash Corporation (TSX:WPX) has secured $80 in investment from Beijing Tairui Innovation Capital Management. Tirui is a Chinese private equity firm that focuses on energy and mining, and will now have a 51 percent ownership stake in Western Potash. The terms of the deal also grant Tirui the ability to appoint four nominees to the board of directors. “They’ve done a number of deals that are more in the electric power sector, but they saw us as a great opportunity and an undervalued opportunity,” said Patricio Varas, company president and CEO. “And of course China is a big market for potash and the potash market is growing in Southeast Asia.”

Crescent Point Energy Closes $1.53 Billion Legacy Oil + Gas Acquisition

Crescent Point Energy Corporation (TSX, NYSE: CPG) has purchased Legacy Oil + Gas Inc (TSX: LEG). Legacy Oil + Gas is a Calgary-based company that develops and produces petroleum and natural gas properties. The transaction provided an exit to Canadian private equity firm KERN Partners. The acquisition will also provide Crescent Point with approximately 200 net sections of land in the emerging Midale light oil resource play. “We have a strong five-year plan in this price environment that allows us to grow production, grow the company and maintain our dividend through this time period,” said Scott Saxburg, President and CEO of Crescent Point Energy, prior to the completion of the sale.

High Road Capital Partners Buys Ariad, Builds Cross-Border Agency

U.S. private equity firm High Road Capital Partners purchased Ariad Communicatins for an undisclosed transaction amount. Ariad is a Toronto-based agency specializing in strategic digital and content marketing. High Road will combine Ariad with another portfolio company, Bluespire Marketing to create a cross-border company. Mike Beckerman, President of Ariad, will serve as CEO of the newly combined business. He said, “Ariad and Bluespire are experts in strategy, content and technology with deep subject matter expertise in healthcare and financial services, giving our existing and prospective clients expanded resources to draw from.”

Extendicare Completes $870 Million Sale of its U.S. Business

Extendicare Inc (TSX: EXE) has completed the previously announced sale of its U.S. business to a group of investors led by U.S. private equity firm Formation Capital and an affiliate of Dubai’s Safanad. Extendicare has its headquarters in Markham, Ontario and operates a network of 112 senior care centres. The company’s President and CEO Tim Lukenda said, “We are pleased to have completed this strategic transaction which will facilitate the repositioning of Extendicare as a pure-play Canadian senior care and services company.”

Montreal Marketing Agency Sid Lee Acquired by Japan’s Kyu

Independent advertising agency Sid Lee was sold to a Hakahodo DY Holdings, a longstanding firm based in Tokyo. Financial terms of the deal were not disclosed. Sid Lee is a creative services agency based out of Montreal, with global offices in Toronto, Paris, Amsterdam and New York. The firm handles advertising for international brands including Absolut Vodka, the Toronto Raptors and Red Bull. The acquisition is intended to help the Canadian firm grow its presence in Asia as it continues to operate under the same name. “Our goal is to serve clients globally. Our clients are asking it from us,” said Sid Lee chairman Bertrand Cesvet. “It’s not about us becoming something else. It’s about giving us an opportunity to grow. It is a match made in heaven.”

Hamilton-Based Phoenix Dental Laboratory Acquired by PE-Backed MicroDental

MicroDental, backed by Healthpoint Capital, has acquired Phoenix Dental Laboratory Inc for an undisclosed amount. Phoenix will merge with MicroDental’s Hamilton division to serve the GTA. MicroDental is headquartered in Dublin, California and operates a network of dental laboratories. Phoneix Dental Laboratory manufactures and distributes high-quality crowns, bridges, dentures and implants to dentists. Following the acquisition, the lab will continue to offer local pickup, delivery and chairside services. Phoenix Dental owner Davide Dessenga, Registered Dental Technicial, said, “Partnering with MicroDental gives us access to materials, technologies, and resources that will make it easier for us to meet the needs of our dentists and their patients. We are also excited about the opportunity to join a leading group of laboratories that share our same values and commitment to customer service, technology, and quality.”

Centerbridge Partners Will Buy KIK Custom Products from CI Capital

U.S. private equity firm Centerbridge Partners has agreed to buy KIK Custom Products. KIK is based in Concord, Ontario and is a leading Canadian manufacturer of household, personal care, pool and spa treatment products with facilities across Canada, the U.S., Europe, Africa and Australia. The transaction value is undisclosed, but a report by Reuters estimates the value of the deal could be more than $1.5 billion. The seller in the transaction is U.S. private equity firm CI Capital Partners who purchased KIK in 2007. “This news follows a strong year for KIK and will help accelerate momentum,” KIK Custom Products President and CEO Jeff Nodland said. “With the successful completion of this transaction, KIK will be uniquely positioned to continue on its growth trajectory. Centerbridge has a proven track record of driving long-term sustainable value creation, and we look forward to building on our successes with our new investors. 

Financing

Fulcrum Capital’s Fund V Closes Above Target at $344 Million

Fulcrum Capital Partners has raised the largest private equity partnership in the firm’s history and surpassed the target set for the close of Fulcrum Capital Partners V LP. The Fund V secured $344 million in committed capital, exceeding its initial goal of $275 million by 25 percent, and exceeding its revised target of $300 million by 15 percent. The initial target was updated in response to enthusiasm from new and repeat limited partners, most of which were Canadian pension funds who helped to bring Fund V $180 million in its first close. Foreign institutional investors from the U.S., Europe and Asia accounted for most of the subsequent $164 million committed this year. In total, around 20 domestic and international LPs committed to Fund V. Fulcrum Managing Partner Neil Johansen said this success “reflects investors’ confidence in the opportunity available in the Canadian middle market and the strong track record of the Fulcrum investment team over the past 15 years.”

Fix Auto Canada Receives $8.2 Million in Funding from Caisse de Depot

The Caisse de depot et placement du Quebec has invested $8.2 million in Montreal’s Fix Auto Canada. Fix Auto operates a network of 215 auto body shops across Canada offering a variety of collision repair services. The funding comes in a combination of equity share purchases and subordinated debt, and will help the company grow through strategic acquisitions and investments. “Having a long-term financial partner gives us the agility that we need to achieve our aggressive growth targets,” says Steve Leal, President of Fix Auto Canada. “And having the Caisse on board is a major vote of confidence in the Fix Auto network.”

Crown Capital Partners Raises $65 Million in IPO

Canadian finance firm Crown Capital Partners raised gross proceeds in excess of $65 million in its initial public offering. Crown Capital is a specialty investment firm that provides alternative debt financing for PE-backed and unsponsored middle market transactions. Most of the net IPO proceeds will be used to gain an interest in its latest fund, Crown Capital Fund IV and to finance long-term debt. The firm’s shares began trading last week on the Toronto Stock Exchange (TSX: CRN)

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