Chart of the week: Economic conditions favour Canada

Closed-ended Canadian private equity fundraising appears strong alongside growing deal volume.  

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Deal volume in Canada jumped almost 20 percent in 2015, according to the Canadian Venture Capital and Private Equity Association (CVCA).

Last year saw 399 completed deals, compared with 334 a year earlier, according to the CVCA’s Canadian Private Equity Market Overview and as reported by Private Equity International.

PEI’s Research & Analytics team have taken a further look at the Canadian private equity market to find out if fundraising figures for closed-ended vehicles investing into the country have similarly risen.

Since 2010, Canada-focused private equity fundraising has followed a clear trend of a peak year followed by a sharp fall in aggregate capital raised. With a relatively small number of funds closed year-on-year when compared with the country’s larger neighbour, the US, this is likely due to fund managers taking time to invest capital raised in a peak year before launching a new vehicle.

If the trend continues, 2016 is expected to be a quiet 12 months for fundraising. However, aggregate capital raised this year is already 42 percent of the total amount raised in 2015. Two months into 2016, $1.3 billion has been raised from the close of four private equity funds focused on the region.

Many Canadian funds draw capital from US investors and make exits in US dollars. Economic conditions have therefore been favourable for investments into the country, with the US dollar strong against its Canadian counterpart. This can only continue to have a positive influence on fundraising in the year ahead.Â