Venture Capital & Private Equity H1 2019 Québec Market Overview

Half a billion dollars invested in venture capital and one-quarter of Canada's private equity transactions in Quebec in the first half of 2019

MONTRÉAL--()--Réseau Capital and the Canadian Venture Capital and Private Equity Association (CVCA) today released the market overview report of the Quebec venture capital and private equity market for the first half of 2019. 2019 in Quebec has so far been marked by two major stock market listings: Lightspeed POS and Milestone Pharmaceuticals. In addition, during the second quarter of 2019, $358 million was invested in 46 venture capital-backed operations in Québec, 58% more than in the same quarter last year. For the first six months of 2019, $532 million was invested in 81 transactions, representing 32% of all transactions in Canada.

Included in the venture capital transactions in the first half of 2019 was the $76 million financing round of the Montreal-based company Enerkem from a syndicate of investors that included Cycle Capital Management/Ecofuel, Fondaction CSN, Fonds de solidarité FTQ, Investissement Québec and National Bank.

Two Quebec companies were listed on the stock exchange during the first half of the year:

  • Lightspeed POS Inc. listed on the Toronto Stock Exchange (TSE: LSPD) with a market capitalization of $1.1 billion and whose initial investors included the Caisse de dépôt et placement du Québec (CDPQ), iNovia Capital, Investissement Québec and Teralys Capital; and,
  • Milestone Pharmaceuticals Inc. (NASDAQ: MIST) which completed its initial public offering with a market capital of $468 million.

"Innovation in Québec is thriving and investors are recognizing it and are partnering with more and more promising companies,” said Daniel Charron, CEO of Réseau Capital. “The value-creation opportunities are strong in the province – with a strong showing in the first half.”

Private Equity in Quebec: $1.8 billion invested in H1 2019

The most important transactions in the first half of the year included:

  • The $103 million financing of the JLD Group of Laval by a consortium of investors including BDC Capital, BMO Capital Partners, Fondaction CSN and Fonds de solidarité FTQ;
  • JLD-Laguë's $58 million growth investment by Fondaction CSN and Fonds de solidarité FTQ; as well as,
  • The investment for Montreal-based Telecon Group by Clearspring Capital Partners, Desjardins Capital and Caisse de dépôt et placement du Québec.

"Québec can count on a strong, diversified and sophisticated financing chain to support its current and future economic champions. This is a key factor in promoting the growth and internationalization of companies, innovation and diversification of our economic fabric," concludes Daniel Charron.

Highlights of the overview of the Québec venture capital and private equity market for the first half of 2019 are available here.

Québec Venture Capital Highlights

Q2 2019 Highlights

  • $325M was invested over 45 deals in Q2 in Québec, 44% higher than the same quarter last year ($226M)
  • The average VC deal size ($7.2M) dropped 9% from last year ($7.9M) but was 12% higher than the average for the 5-year period 2014-2018 ($6.5M)
  • There was 1 undisclosed $50M+ mega-deal that closed in the second quarter

YTD H1 2019 Highlights

  • $499M was invested over 80 VC deals in Québec
  • The average YTD VC deal size was $6.1M, dropping 21% from last year ($7.9M) and 6% lower than the average for the 5-year period 2014-2018 ($6.5M)
  • There were 2 $50M+ mega-deals that included:
    • Montréal-based Enerkem’s $76M round from a syndicate of investors including Cycle Capital Management/Ecofuel, Fondaction CSN, Fonds de solidarité FTQ, Investissement Québec and National Bank of Canada
  • Québec captured a third of the number of VC deals (80 out of 256) and 23% of dollars invested ($499M out of $2.1B)
  • 3.8 out of every 10 deals were between $1M-$5M, followed by deals between $5M-$20M capturing a 15% share (12 out of 80 deals)
  • Life sciences companies garnered $223M, a 45% share of total dollars, up significantly from its average 28% share over the 5-year period 2014-2018; Québec-based ICT companies received 26% ($128M) of total investment
  • Montréal-based companies received $440M over 66 deals second only to Toronto-based companies that received $774M over 77 deals
  • There were 11 exits involving VC-backed companies including 2 IPOs involving Montréal-based companies:
    • Lightspeed POS Inc. listed on TMX with a market cap of $1.1B – investors included Caisse de dépôt et placement du Québec (CDPQ), iNovia Capital, Investissement Québec and Teralys Capital
    • Milestone Pharmaceuticals Inc. closed its IPO on Nasdaq with a market cap of $468M

Québec Private Equity Highlights

Q2 2019 PE Highlights

  • $831M was invested over 100 deals, 60% lower than the $2.1B from the same quarter last year
  • The average deal size dropped 60% from $20.9M in Q2 2018 to $8.3M
  • The largest deal that closed in Q2 was the $103M financing of Laval-based JLD-Group from an investor syndicate that included BDC Capital Inc., BMO Capital Partners, Fondaction CSN and Fonds de solidarité FTQ

YTD H1 2019 PE Highlights

  • $1.8B was invested over 171 deals in H1 2019, 42% lower than the $3.2B from the same period last year
  • The average deal size this year dropped by almost half from $19.5M in 2018 to $10.8M
  • The largest disclosed deals included:
    • $103M financing of Laval-based JLD-Group from an investor syndicate that included BDC Capital Inc., BMO Capital Partners, Fondaction CSN and Fonds de solidarité FTQ
    • Montréal-based TELECON Group’s $65M follow-on deal from Desjardins Capital
    • $58M growth deal in JLD-Laguë based in Laval from Fondaction CSN and Fonds de solidarité FTQ
  • Québec captured more than half of all Canadian PE deals (171 out of 289), more than twice than Ontario’s 20% share
  • 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
  • 25% of deals (43 deals) went to companies in the Industrial and Manufacturing sector, with a 15% share (26 deals) going to ICT companies and the agri-forestry sector receiving 14% (24 deals)
  • There were 7 PE-backed exits totalling $21M from Québec-based companies

About Réseau Capital

Réseau Capital, the Québec Venture Capital and Private Equity Association, is the only private equity association that brings together all stakeholders involved in the Québec investment chain. The mission of Réseau Capital is to contribute to the development and efficient operation of the private equity industry, which plays a major role in the development and financing of businesses in Québec.

Founded in 1989, Réseau Capital represents private equity, tax-advantaged and public investment companies as well as banks, accounting and law firms, along with many professionals working in the field. Please visit: http://www.reseaucapital.com

About the CVCA

We’re how collaboration happens and how innovation and growth thrive.

The CVCA is Canada’s professional association for the venture capital and private equity industry. Our services and support establish a favourable and competitive ecosystem and lay the foundation for greater collaboration, innovation, growth and market intelligence. We strongly advocate for fair and competitive policy to keep our industry energized.

From coast to coast, we bring members together; connecting private capital professionals to each other generating meaningful partnerships, enabling connections to foster and knowledge to prosper.

We’re also the nation’s ultimate resource for data on Canadian private capital investments. Please visit: http://www.cvca.ca.

Contacts

For more information or to arrange an interview, please contact:
Catherine Berbery
Direct: 514-880-2372

Contacts

For more information or to arrange an interview, please contact:
Catherine Berbery
Direct: 514-880-2372