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Canadian Private Market Recap: June 3

  • Posted By: Ann Zhang and Paris Aden

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  • Comments: 0

Market Update

Stocks were mixed for the holiday-shortened week and finished neutral at the end of the week. The equity market essentially shrugged off a disappointing May jobs report, which sent a negative signal for the U.S. economy but drove optimism the Federal Reserve could wait longer before pursuing any short-term interest rate hike. The TSX rose almost a percent this week with the materials sector significantly outperformed. The disappointment on the jobs front was met with a swift adjustment to Fed rate hike expectations as the probability of a June hike, expressed by the fed funds futures market, dropped to 6% from 30% a week ago. Expectations for July move also fell to 35% from 62% one week ago.

Meanwhile, credit markets remained robust.

 

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Change From

U.S. Middle Market Loans

This Week

Last Week

Year Ago

 

Last Week

Year Ago

 

 

 

 

 

 

 

 

New Issue Clearing Yield ≤ $50 million

6.3%

6.8%

6.8%

 

-0.5%

-0.5%

 

Spread to Treasury

463 bps

498 bps

445 bps

 

-35 bps

+18 bps

 

Total Debt/EBITDA

4.7x

5.5x

5.1x

 

-0.8x

-0.4x

 

 

 

 

 

 

North American M&A activity slowed down significantly from the levels seen a year ago, particularly in the U.S., as acquirers have become more cautious given historically high valuations and a general sense that the current economic expansion may be nearing its cyclical peak. This first quarter is usually the least active month for M&A activity, so month-over-month comparisons at this time of year are less meaningful.

 

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Change From

M&A Market Fundamentals

4/30/16

3/31/16

4/30/15

3/31/16

4/30/15

Number of Transactions

 

 

 

 

 

 

Canada

118

101

131

+16.8%

-9.9%

 

U.S.

1,147

1,257

1,668

-8.8%

-31.2%

 

Canada % of Total

9.3%

7.4%

7.3%

+1.9%

+2.0%

 

 

 

 

 

 

 

Dollar Volume (US$ in billions)

 

 

 

 

 

 

Canada

16,380

11,173

19,607

+46.6%

-16.5%

 

U.S.

323,182

371,901

408,999

-13.1%

-21.0%

 

Canada % of Total

4.8%

2.9%

4.6%

+1.9%

+0.2%


Valitas Insights: Canadian PE Activity by Province

PitchBook released a report on Canadian private equity activity last week. According to the report, Ontario continues to be the most active province in Canada. Some of the most interesting charts from the report are shown below:

Click here to review the full report.

Business Transitions Forum in Toronto on June 8: Maintaining Confidentiality During a Competitive Sale Process

Weekly Canadian Private Market M&A Report

Announced Deals

OpenText to buy venture-backed Recommind for $163 million

OpenText Corp. (Nasdaq: OTEX, TSX: OTC) has agreed to acquire Recommind Inc., a U.S. provider of e-discovery and information analytics. The deal reflects a purchase price of US$163 million. Waterloo-based OpenText said the acquisition will complement its own enterprise information management solutions, and is expected to generate between US$70 million and US$80 million of annualized revenue.

Azimuth-backed Kaisen to buy Hawk Exploration for $16.1 million

Hawk Exploration Ltd. (TSX-V: HWK.A) has agreed to be acquired by Kaisen Energy Corp for about $16.1 million, including debt. The deal, which is supported by Hawk’s board of directors and holders of 40.5 percent of the company’s outstanding shares, is expected to close in mid-July.

Closed Deals

Eddyfi Technologies acquires PE-backed Silverwing

Eddyfi Technologies has acquired Silverwing Group, a Swansea, U.K.-based developer and manufacturer of non-destructive testing (NDT) products to inspect storage tanks, vessels and piping for corrosion. No financial terms were disclosed. Martin Thériault, President and CEO of Eddyfi Technologies said, “Silverwing was a unique opportunity in terms of fit and size for Eddyfi Technologies. This is a growth-focused acquisition. Being an NDT technology company, we certainly appreciate Silverwing’s nature and vision for product excellence. Just like we have done for the Eddyfi product lines, we will invest significantly in innovation and new product development. Simultaneously, the merging of two global sales organizations, leveraging offices staffed with skilled technical support professionals and engineers, is extremely positive.”

JMC Capital Partners acquires Vertigo Digital Displays

U.S. private equity firm JMC Capital Partners has bought Vertigo Digital Displays Inc., a Canadian designer, engineer and maker of integrated digital signage solutions and out-of-home media products. No financial terms were released for the acquisition, which was undertaken by JMC via its Milford, Mass.-based portfolio company, CIVIQ Smartscapes LLC. Michael D’Amelio, Managing Partner of JMC Capital Partners said, “This is a further advancement in CIVIQ’s strategy to provide a comprehensive portfolio of connected urban technology. Vertigo’s product breadth and design capability as well as their customer relationships are a great complement to the CIVIQ business.”

Constellation Software buys PE-backed software provider Vicrea

Total Specific Solutions BV (TSS), an affiliate of Constellation Software Inc. (TSX: CSU), has acquired all of the shares of Vicrea Solutions BV, a Dutch software provider of GEO IT solutions for the local government sector. No financial terms were disclosed. Han Knooren, GM of TSS commented on the deal, “Vicrea, market leader in GEO IT for integrated information solutions, is a valuable addition to the TSS-group. Adding Vicrea to our public sector vertical further strengthens our market position in this domain.”

Delos-backed Interstate closes buy of TorQuest’s FirstOnSite

Interstate Restoration LLC has closed its acquisition of FirstOnSite Restoration LP, a Canadian disaster restoration services provider. No financial terms were released for the acquisition, which was announced in April. Stacy Mazur, CEO of Interstate Restoration said, “More than our sheer size, our quality of service and our reputation for responsiveness in disaster situations have determined Interstate Restoration’s success. But our growth is an indication of how positively our clients have responded to us over the years, and it gives us greater resources to address clients’ needs on an even greater scale.”

Lynx Equity’s Succession Capital acquires U.S. footwear wholesaler

Succession Capital, the U.S. subsidiary of Canadian private equity firm Lynx Equity, has bought North American Shoe Co Inc., a distributor of men’s, women’s and children’s footwear and accessories throughout North America. “With nearly 100 years in existence, this company (American Shoe Co Inc.) has demonstrated its permanence in the marketplace. These results have been a product of strong fundamentals and the ability to be dynamic in an ever-changing industry,” commented Lynx President Brad Nathan. “We are thrilled to have acquired our second company in the footwear space and look forward to capitalizing on synergies where they exist.”

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