H1 2018 VC & PE Québec Market Overview
H1 2018 VC & PE Québec Market Overview: Québec Captures Over A Quarter Of Venture Capital Activity In The Country; The Most Active Province For Private Equity Deals
August 23, 2018 – Montréal, QC – Québec venture capital saw $210M invested over 60 deals in Q2; 92% more than Q1 2018 but 40% lower compared to Q2 2017. Québec captured 31% of the total number of VC deals in Canada (94 out of 308) in the first half of the year and 19% of the total dollars invested ($319M out of $1.7B).
In PE, the province saw $2B invested over 92 deals in Q2 bringing the total invested dollars in the first half to $3.3B over 177 deals. There was a 10% increase in volume of deals compared to H1 2017 but a 22% drop in invested dollars ($4.2B to $3.3B).
“Venture capital investors are continuing to see the value in the high quality, innovative businesses in Québec,” says Réseau Capital CEO, Jack Chadirdjian. “The province continues to offer a magnitude of value-creation opportunities as indicated by the PE numbers.”
There were seven venture capital exits in the first half of the year in Québec. This included the $141M corporate acquisition of TVM Life Science Management portfolio company AurKa Pharma by Eli Lilly and the $100M transaction in Coveo Solutions Incorporated from a private equity firm based in the United States. Selling investors in the Coveo Solutions transaction included Tandem Expansion Fund, Fonds de solidarité FTQ, Investissement Québec and BDC Capital.
The largest private equity exit in Québec in H1 was the $3B corporate buyout of Atrium Innovations Incorporated by Nestlé. The selling investors included Fonds de solidarité and Caisse de dépôt et placement du Québec (CDPQ).
Quebec Venture Capital Highlights
Q2 2018 Highlights
- $210M was invested over 60 deals in Q2 in Quebec, 92% more than the previous quarter ($109M) but 40% lower than the same quarter last year ($348M)
- The average deal rise rose 9% from $3.2M to $3.5M
H1 2018 VC Highlights
- The largest deal was the $59M series D round in Breather Products Inc. by an investor syndicate that included Caisse de dépôt et placement du Québec (CDPQ)
- Québec captured 31% of the total number of VC deals (94 out of 308) and 19% of dollars invested ($319 out of $1.7B).
- Just over a third of VC activity (34 out of 94 deals) was in deal sizes between $1M-$5M, followed by deals between $100K-$500K capturing a 27% share.
- ICT companies garnered $157M, a 49% of total dollars, down 4% from its 2017 share.
- Agribusiness companies received $33M or 17% of total dollars, a significant spike from its 4% share in 2017.
- Montréal-based companies received 68% (64 out of 94 deals) of VC deal flow followed by Laval-based companies with a 7% share (7 out of 94).
- There were seven exits involving Québec-based companies which included:
- The $141M corporate acquisition of TVM Life Science Management portfolio company AurKa Pharma by Eli Lilly
- The $100M transaction in Coveo Solutions Inc. from a US private equity firm. The selling investors included Tandem Expansion Fund, Fonds de solidarité FTQ, Investissement Québec and BDC Capital
Quebec Private Equity Highlights
Q2 2018 PE Highlights
- $2B was invested over 92 deals, 54% higher than the previous quarter and 47% higher than the same quarter in 2017.
- The average deal size spiked 42% from the previous quarter from $15.3M to $21.7M.
H1 2018 PE Highlights
- There was a 10% increase in the number of deals in H1 2018 (177) compared to the 161 from the same period last year. However, total PE dollars invested dropped 22% from $4.2B to $3.3B.
- Québec captured 61% of all Canadian PE deals (177 out of 288), more than three times greater than Ontario’s 18% share.
- Just over a third (38%) of all deals were between $1M-$5M, with deals between $5M-$25M capturing a 23% share of the province’s deal activity.
- 28% of deals (49 deals) went to companies in the industrial and manufacturing sector with 14% going to the ICT sector (25 deals).
- The $509M follow-on investment into Stingray Digital Group Inc. was the largest deal this year; Caisse de dépôt et placement du Québec (CDPQ) and Fonds de solidarité FTQ were joint investors.
- The largest exit was the $3B corporate buyout of Atrium Innovations Inc. by Nestlé. Selling investors included Fonds de solidarité and Caisse de dépôt et placement du Québec (CDPQ).