PE Investment: Canadian Businesses, 2014

  • Posted By: Ari Cuperfain

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  • Comments: 0

In Canada, business-to-business (B2B) and business-to-consumer (B2C) are the most active industries for PE investment. B2B and B2C combined tend to account for 40-55% of total PE investment (45.3% in 2014), and this proportion has declined slightly over the past fifteen years. B2B is the largest and has been since the financial crisis. The proportion of B2C has fallen with increasing globalization, as global brands continue to squeeze out or consolidate regional and national brands.

The most striking trend is the growing interest in Canadian commodities. Materials & resources represented almost 6% of PE investment on average from 2001 to 2007, but approximately 15% from 2008 to 2014. When Energy, Materials and Resources are viewed together, the proportion of investment has roughly tracked the commodity cycle. Notably, commodity investments comprised approximately one third of the activity at the height of the recent commodities boom. Although the proportion of PE investment in materials, resources and energy has dipped due to the recent cyclical downturn in commodities, foreign capital is still flowing into Canada’s natural resources.

Canada’s publicly funded and operated healthcare system has made healthcare a minor contributor to overall PE investment, and this is expected to continue.

Our next post will look at the origin of invested PE capital and the increasing presence of international funds in the Canadian market.

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