Why U.S. private equity is setting its sights on Canada
BNN Bloomberg
Data shows there is a growing amount of private money from south of the border flowing into Canadian businesses.
Data shows there is a growing amount of private money from south of the border flowing into Canadian businesses.
Canadian private equity deal flow with U.S. involvement more than doubled over the past five years to $33.8 billion in 2021, up from $13.5 billion in 2016, according to industry deal tracker PitchBook Data, Inc. As well, U.S. investors now represent 56 per cent of all private equity deals in Canada, up from 42 per cent in 2016, the data showed.
Experts agree there are a number of factors behind the influx of U.S. capital into Canada including the sheer amount of money floating around in the American market, the geographical proximity, and the value of the Canadian dollar, but questions remain around who stands to benefit most from this trend.
John Ruffolo, founder of Maverix Private Equity and former head of OMERS’ venture capital arm, said in an interview that he doesn’t want to see American private equity firms exclusively investing in Canadian companies at the expense of Canadian capital sources.
“Once a Canadian company is sold by an American private equity firm, the vast majority of the gains don't go to Canada,” he said.
Canadian businesses are easy takeover targets for American investors, he added, because they are largely undervalued given the Canadian marketplace has less local capital available.
