A recent Thomson Reuters report indicates the Canadian buyout-private equity market had a record first half of the year in terms of deal volume. With at least two deals valued at over $1 billion, the value of buyout-private equity deals in the first half of 2015 was also the most since 2007, up 69% over the same period last year. The record deal volume also represented a 2% increase of the year prior.

Of particular note is the proportion of overall M&A activity which is now represented by buyout-private equity deal structures. Compared to historical levels four years ago, the number of buyout-private equity deals completed in the first half of 2015 has now doubled relative to the number of conventional M&A deals.

One explanation for the continued growth in the Canadian private equity market may be the tremendous boost that such funds raised over the past three years – tripling and quadrupling fund the raising levels that were attained four years ago. While the first half of 2015 indicates some moderation in fund raising activity, this year will remain another robust one for investment. Present levels indicate funds raised are already in excess of levels attained four years ago.

In terms of the allocation of buyout-private equity capital, one-fifth of the number of deals completed in the first half of the year involved companies in the manufacturing sector. Deals involving companies in the oil & gas and mining sectors combined for another fifth of the deal volume, followed closely by the software, finance, consumer and health-related industries. However, deals involving capital intensive oil & gas firms represented a significant proportion of deal value in the buyout-private equity space for the first half of the year.

With 2015 already indicating robust fund raising and record deal value in the first half of a year, the second half of 2015 should continue to increase the profile of buyout-private equity oriented structures among Canadian M&A transactions.

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