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Canadian Private Market Recap: May 13

  • Posted By: Ann Zhang, Paris Aden & Anan Sivapalu

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Market Updates

The Canadian equity markets eked out a slight gain this week as result of a mid-week rally in oil prices. However, the U.S. equity markets were spooked by speculation that further Fed rate increases in 2016 are likely due to positive sales data from the retail sector and the resurgence of the U.S. dollar. In the global markets, Europe remains cautiously optimistic and China’s industrial output showed signs of cooling off. Credit spreads have stabilized and leverage levels, now greater than 5x on average, remain robust by historical standards.    

 

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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

7.0%

7.1%

6.3%

 

-0.1%

+0.7%

 

Spread to Treasury

531 bps

531 bps

406 bps

 

-0 bps

+125 bps

 

Total Debt/EBITDA

5.5x

5.1x

4.7x

 

+0.4x

+0.8x

 

 

 

 

 

 

 

To further emphasize the liquidity available to drive M&A activity, corporate cash balances for the equity index constituents as of the end of April were approximately $7.4 trillion.  While this is down 2.4% from the $7.6 trillion one year earlier, it remains extraordinarily high.

(US$ in billions)

For Period Ended

Change From

Aggregate Corporate Cash  

4/30/2016

3/31/2016

4/30/2015

3/31/2016

4/30/2015

 

 

 

 

 

 

 

S&P 500 Constituents

5,892

5,912

6,128

-0.3%

-3.8%

 

TSX Composite Constituents

1,502

1,516

1,447

-0.9%

+3.8%

 

 

 

 

 

 

Valitas Insights: What is your M&A Deal’s North Star?

Tim Morton, Founder of Prompta Inc. and Valitas Advisor has published an article regarding post-merger integration planning and the importance of articulating a clear vision as a navigation reference for successful integration, or the integration plan’s “North Star”.

Why do so many acquisitions fail?  What is common among those acquisitions that achieve their stated goals?  Click here to find out.

 

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

Weekly Canadian Private Market M&A Report

Announced Deals

Cooke Aquaculture to buy Paine & Partners’ Icicle Seafoods

Canada’s Cooke Aquaculture Inc. has agreed to acquire Icicle Seafoods Inc., a seafood products processor based in Seattle, Washington. No financial terms were disclosed for the deal. Cooke, a family-owned aquaculture business headquartered in Saint George, New Brunswick, said the deal will make it a leader in the U.S. salmon farming industry, and a major player in the Alaskan salmon fishery. Icicle said it will gain capital to modernize its platform, expanded market access, and a broader product offering.

Caisse to buy hosting business of venture-backed AirVM

The parent of TeraGo Networks Inc. has agreed to acquire the international hosting business of AirVM Inc., an Ottawa-based cloud management platform. No financial terms were released for the deal, which is expected to close this month. Stewart Lyons, President and CEO of TeraGo, commented on the transaction, “This acquisition gives us some international presence, and enables us to serve European and American customers with very competitively priced offerings due to foreign exchange rates. We are also excited to welcome the new employees to our Company who have previously worked to successfully build and grow the Hosting Business at AirVM.”

Closed Deals

Amcor acquires Richardson Capital-backed Plastic Moulders

Amcor Ltd. has acquired Plastic Moulders Ltd., a Canadian manufacturer of precision injection moulded plastic products for customers in North America. The purchase price was $38 million (US$30 million). Amcor, an Australian packaging business, said the acquisition will generate synergies in terms of procurement, manufacturing costs and overhead, and broaden its product offering. Amcor CEO and Managing Director, Ron Delia, said, “The Amcor Rigid Plastics business has significant growth opportunities in market segments outside of the traditional non-alcoholic beverage markets. Our strategy to grow this business includes acquiring companies like Plastic Moulders that provide specialised manufacturing capabilities, which will enable Amcor to broaden our product offering for the benefit of current and future customers.”

Enercare closes $341 million buy of PE-backed Service Experts

Enercare Inc. (TSX: ECI) has closed its acquisition of Service Experts, a heating, ventilating, and air conditioning (HVAC) services and repairs specialist based in Dallas, Texas. The deal, which was announced in March, had a US$340.75 million value. John Macdonald, President and Chief Executive Officer of Enercare, commented on the deal, “North American expansion has been part of our strategic roadmap and is a natural extension to our business. Through Service Experts we emerge as a North American market leader, creating new opportunities for growth and broadening our scope from Canada to North America while driving considerable incremental value for shareholders. In 2016, we expect the acquisition of Service Experts to be 25% accretive to Normalized pro forma Distributable Cash per common share.”

Parallel49 Equity makes Questco its first deal since rebranding

Canadian private equity firm Parallel49 Equity has acquired Questco LLC, a Houston, Texas-based professional employer organization. No financial terms were disclosed. Founded in 1989, Questco provides a range of outsourced human resource solutions, including payroll and tax administration, employee liability and risk management, employee benefits and training. It is Parallel49’s first disclosed platform investment since the firm’s launch in December following a rebranding of Tricor Pacific Capital‘s fifth fund.

Lightyear Capital and PSP Investments close Advisor Group deal

U.S. private equity firm Lightyear Capital and Canada’s Public Sector Pension Investment Board (PSP Investments) have completed their acquisition of Advisor Group from American International Group Inc. (NYSE: AIG). No financial terms were released for the deal. “As an independent entity, Advisor Group will maintain our strong franchise and most importantly, the unique cultures of our four broker-dealers,” said Erica McGinnis, President and CEO of Advisor Group. “In an incredibly dynamic and evolving industry, we firmly believe that we’ll be in a position to capitalize on future opportunities with our new investors.”

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