2019 Venture Capital & Private Equity Québec Market Overview

Québec Sees 37% Increase in Invested VC Dollars In 2019 and 60% of All Canadian PE Deals Went to Québec-based Companies

$500M venture capital (VC) dollars was invested in Q4 2019 brining the year-end total to CAD $1.6B over 165 deals; a 37% increase from the CAD $1.1B (142 deals) in 2018. There were 8 $50M+ VC mega-deals in 2019 in Quebec which included:

• CAD $227M growth financing of Québec-based Coveo Solutions Inc. by a syndicate that included Fonds de solidarité FTQ, Investissement Québec and OMERS Private Equity Inc.
• Montreal-based Element AI Inc.’s CAD $200M series B round by an investor syndicate that included Caisse de dépôt et placement du Québec (CDPQ), BDC Capital Co-Investments, Investissement Québec and Real Ventures
• Montreal-based Repare Therapeutics Inc.’s CAD $109M financing from investors that included BDC Healthcare Venture Fund, Fonds de solidarité FTQ and Versant Venture Management, LLC

“The venture capital industry in Quebec picked up the pace in the fourth quarter and had an excellent year. Innovation in Quebec is flourishing. The long-term growth prospects are great, and investors clearly understand this by working with more and more successful companies“, said Daniel Charron, CEO of Réseau Capital. Private Equity: 41% more than in 2018 In private equity, $6.5B was invested in the last quarter of 2019, close to 2.5 times the amount invested in Q4 2018 bringing the total PE investment to $9.7B over 332 deals; 41% higher than CAD $6.9B in 2018. Among the largest disclosed PE deals in 2019:

• $5.2B recap of Montreal-based Garda World Security Corp. by a European investor
• $653M financing of McInnis Cement Inc. from Caisse de dépôt et placement du Québec (CDPQ)
• CAD $385M PE recapitalization by Caisse de dépôt et placement du Québec (CDPQ) of Montreal-based Quebec Iron Ore, a subsidiary of TSX-listed Champion Iron Limited, with operations in northern Quebec
• CAD $300M follow on financing of La Coop fédérée by a syndicate which included Caisse de dépôt et placement du Québec (CDPQ), Desjardins Capital, Fondaction CSN and Fonds de solidarité FTQ

“Quebec can rely on a strong and sophisticated venture capital and private equity industry, and private investors are present to support companies in their innovation and growth project”, recalls Daniel Charron.

---

Quebec Venture Capital Highlights Q4 2019 Highlights

• The average VC deal size ($10.2M) increased 27% compared to last year ($8.1M) and was 1.6 times greater than the average for the 5-year period 2014-2018 ($6.5M)
• There were 2 $50M+ mega-deals that closed in the fourth quarter

2019 VC Highlights

• The average VC deal size in 2019 was $9.5M, up 18% from last year ($8.1M) and 47% higher than the average for the 5-year period 2014-2018 ($6.5M)
• Quebec captured almost a third of the number of VC deals (165 out of 539) and a quarter of all dollars invested ($1.6B out of $6.2B)
• A third (53 out of 165) of deals were between $1M-$5M, followed by deals between $5M-$20M capturing a 17% share (28 out of 165 deals)
• Quebec-based ICT companies received the largest share (56% of $1.6B) of total investment; the life sciences sector was second, garnering $405M, a 26% share
• Montréal-based companies received $1.1B over 128 deals second only to Toronto-based companies that received $1.9B over 157 deals
• Within the province, Montréal-based companies received 78% (129 out of 165 deals) of VC deal flow followed by Québec City with a 7% share (12 out of 165 deals)
• 81 early-stage deals captured 44% ($692M) of total dollars and 27 later-stage deals 29% ($462M); there were 45 seed-stage deals that totalled $55M
• Quebec captured the largest share (39%) of Canadian VC Debt deals ($54M over 43 deals)

Quebec Private Equity Highlights Q4 2019 PE Highlights

• The average deal size almost doubled compared to Q4 2018 from $32.6M to $96.1M
• The largest deal that closed in Q4 was the $5.2B recap of Montreal-based Garda World Security Corp. by a European investor

2019 PE Highlights

• The average deal size this year increased by 49% from $19.6M in 2018 to $29.3M
• Québec captured 6 out of 10 of all Canadian PE deals (332 out of 526)
• 4 out of every 10 deals were between $1M-$5M, with deals between $5M-$25M capturing a 22% share of the province’s deal flow
• 30% of deals (98 out of 332) went to companies in the Industrial and Manufacturing sector, with a 14% share (45 deals) going to Agri-forestry companies and 13% share to the ICT sector (44 deals)