CANADIAN PRIVATE EQUITY BUYOUT REVIEW

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1 CANADIAN PRIVATE EQUITY BUYOUT REVIEW First Half 2015 REUTERS / Mark Blinch

2 Table of Contents Canada s Buyout & PE Market in H $ Invested and # Companies Financed 5 Top Buyout Deals 9 Canada by Market Segment 10 Canada by Sector & Province 12 Canadian Investments Abroad 14 Buyout Funds Raised 16 Public and M&A Exits 17 Explanatory Notes & Contacts 18

3 Overview of Canadian PE Buyout Market Activity in First Half 2015 Canadian buyout-pe market trends Deal-making activity in Canada s buyout and related private equity (PE) market showed continuing growth in the first half of Disclosed values of transactions (announced and completed) totaled $11.4 billion as of June 30th, the strongest first half for Canadian private equity buyouts since A total of 205 deals were done in the first six months, a new high for the number of private equity deals done from January to June. The $5.5 billion invested in the second quarter was down 8% from the first quarter of 2015 when $6.0 billion was invested, but more than doubled over Q Indeed, Q2 this year saw the most dollars invested in any second quarter since As compared to traditional merger & acquisition activity in Canada, the number of private equity deals has increased to 28% of the number of eligible M&A deals in the first half this year, doubling from a low of 14% in Top deals included Teachers $3.3 billion acquisition of Heritage Royalty, Cenovus Energy s oil & gas royalty business unit, and Brookfield Asset Management s investments in Brookfield Residential Properties and the PE-backed merger of Ainsworth Lumber with Norbord, for $1.1 billion and $763 million respectively. At the end of June, six large-cap transactions sized $500 million or greater captured 63% of all disclosed disbursements made in the Canadian market. Deals sized between $100 million and $500 million took the second largest share of the total, or 22%, while deals sized less than $100 million accounted for the balance. Canadian market trends by sector Canadian manufacturing companies accounted for the largest share of buyout-pe deal-making in the first half with 38 transactions, or 19% of the national total. Oil & Gas and Mining companies followed a close second and third with 20 and 19 deals respectively. When measured by disclosed deal values, Oil & Gas and Mining companies dominated the largest transactions with $5.9 billion and $1.6 billion respectively. Manufacturing companies came in third place, attracting $1.3 billion in investment. 3

4 Overview of Canadian PE Buyout Market Activity in First Half 2015 Canadian market trends by region The majority of buyout-pe transactions (announced and completed) in the Canadian market in the first half of 2015 involved businesses that were located in Québec (45%) and Ontario (33%). Ontario demonstrated the most growth over the first half of 2014, however, with 68 deals last quarter, a 55% increase. The number of deals done increased slightly in Quebec (2%), but declined markedly in Alberta (29%), and British Columbia (59%) Though the number of deals done in Alberta declined in the first half, the province attracted the bulk of the largest deals, securing $7.1 billion, more than all other provinces combined. Ontario-based companies attracted the second largest share, with $2.3 billion, followed by Quebec companies with $1.9 billion. Canadian investor activity in global markets Canadian buyout and related PE funds were substantially more active in international transactions in the first half relative to the year before. As of June 30th, Canadian funds led or participated in a total of 82 deals in other countries, and these were valued at approximately $95 billion. This compares against a total of 48 deals valued at $3.7 billion reported in the first half of last year. The largest foreign targets of Canadian buyout firms included CPPIB s acquisition of Antares Capital, CDP s acquisition of PetSmart, and Borealis investment in Swedish electrical company Fortum Distribution. As with pervious periods, Canadian investment abroad was dominated by companies based in the United States. Of the 82 deals done, 67% were in American companies, and these deal values totaled $51.7 billion, or 54%. Canadian PE firms led or participated in 19 deals over $1 billion in the first half, substantially exceeding the 15 such deals made by Canadian investors in the entire 2007 year. Trends in Canadian buyout-pe fund-raising The fundraising activities of Canadian buyout funds maintained strong levels in the first half of 2015 with a total of $4.4 billion of new capital committed. Though only 30% of the $14.7 billion raised in all 2014, this was still a strong showing for Canadian funds, coming off the heels of three consecutive years of strong fundraising activity. 4

5 Deal Value (CAD Billions) Buyout PE Deal Values Top $11 Billion in First Half Up 69% over Best First Half Since 2007 $35 $30 $31.0 $25 $20 $15 $10 $12.0 $11.7 $10.3 $11.4 $5 $ Q1 Q2 Q3 Q4 5

6 Number of Deals Buyout - PE Deal Volumes Up 2% Over 2014 New All-Time Record for Most Deals in First Half Q1 Q2 Q3 Q4 6

7 Number of Deals More Companies Turning to PE as Fewer Canadian Targets Acquired in Conventional M&A % % 25% First Half % 15% 10% 5% 0% Number of Deals % of M&A Activity 7

8 Number of Deals Canadian Investors Funding Fewer Domestic Deals Down 3% From First Half Last Year First Half 2015 Domestic Investors Foreign Investors 8

9 Top Buyout-PE Deals of First Half 2015 Company Province Value (CAD $ Millions) Disclosed Investors Heritage Royalty AB $3,300 Ontario Teachers Pension Plan Brookfield Residential Properties AB $1,113 Brookfield Asset Management Norbord ON $763 Brookfield Asset Management Veresen Midstream AB $760 Kohlberg Kravis Roberts & Co IAMGOLD Corporation - Niobec Mine Ember Resources AB $605 Osisko Mining QC $479 CanEra AB $465 QC $657 Temasek Holdings, CEF Holdings Brookfield Asset Management, KERN Partners, ARC Financial Caisse de dépôt et placement du Québec, Fonds de solidarité FTQ Riverstone Holdings, NGP Energy Capital Management 9

10 Six Largest Buyout-PE Transactions Take 63% of Dollars Deal Size Range # of Deals Done Dollars Invested (Disclosed) > $1 Billion 2 $4,413 Million (39%) $500 Million - $1 Billion 4 $2,785 Million (24%) $100 Million - $500 Million 9 $2,564 Million (22%) $10 Million - $100 Million 35 $1,401 Million (12%) < $10 Million 83 $268 Million (2%) Deal Values Undisclosed 72 $0 (0%) Total Deals With Disclosed Values: 133 (of 205) Total Invested: $11.4 Billion 10

11 Manufacturing Companies Lead in First Half With 19% of Deals Manufacturing Oil & Gas Mining Software Finance Consumer Related Healthcare & Life Sciences IT & Media Energy & Environmental Transportation Construction & Engineering Business Services Agriculture & Forestry Other Industries Total Deals:

12 Oil & Gas, Mining Deals Still Continue to Drive Dollar Flows Oil & Gas Mining Manufacturing Construction & Engineering Healthcare & Life Sciences Energy & Environmental Finance Consumer Related IT & Media Transportation Software Business Services Agriculture & Forestry Other Industries Total Deal Values: $11.4 Billion $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 12

13 # of Deals Québec Holds Top Spot, but Number of Ontario Deals Up by 55% Over Last Year British Columbia Alberta Ontario Quebec Rest of Canada First Half 2014 First Half

14 Amount Invested (CAD $ Billions) # of Deals Canadian Investors, Non-Canadian Companies Canadian PE Investment Abroad Skyrocketing Funds Invest in 13 Deals Over $1 Billion in Q2 Alone $70 $ $60 40 $50 $40 $30 $20 $10 $0 $30.5 $15.6 $11.1 $4.1 $5.3 $1.3 $2.9 $2.2 $1.4 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q Total Deal Values, Including All Investors # of Deals 14

15 Canadian Investments Abroad Focus on U.S, but with Growing Activity in Europe $ $33.2 $ Total Deal Values: $94.9 Billion Total Deals: 82 United States Europe Other Regions 15

16 # of Exit Events Canadian Buyout-PE Exits Down 20% From H Trade Sales Comprise 61% of Exits Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 IPO Financial Sale Trade Sale 16

17 Funds Raised (Billions of $ CAD) Canadian Buyout-PE Fundraising Declining From Lofty Levels Seen Since 2012 $18.0 $16.0 $16.1 $14.7 $14.0 $12.0 $12.2 $10.0 $8.0 $6.0 $4.0 $2.0 $3.8 $4.4 $ First Half

18 Explanatory Notes 1. Data collected and analyzed by Thomson Reuters for this statistical report were drawn from a variety of sources. These include Thomson Reuters M&A databases, regulatory filings, and public and proprietary sources among the members of Réseau du capital d investissement du Québec and other Canadian and non-resident fund managers responding to Thomson Reuters quarterly surveys. 2. All current and previous years data is as of Monday, July 20th, Data is continuously updated and is therefore subject to change. 3. All figures are in Canadian dollars unless otherwise noted. 4. Key statistical indicators (e.g., total disbursements, per quarter or per annum) are influenced by the fact that a substantial fraction of buyout and other PE deals are not fully disclosed. For instance, dollars invested in a given period pertain only to those deals with values that have been published or confidentially disclosed to Thomson Reuters. 5. The data also highlight the deal-making of Canadian funds in non-canadian companies. Dollars invested pertain to the total value of disclosed deals in which Canadian funds have participated and not the specific Canadian financial contributions to these deals. 6. Statistical data reflect all essential forms of buyout-pe deal-making, including control-stake acquisitions of businesses, minority equity investments, restructuring and special-situations transactions, mezzanine deals over $3 million, and other quasi-equity investments. 7. For further information on Thomson Reuters venture capital and private equity offerings, please visit us at: 8. For further reports on private equity, venture capital, and other asset classes, please visit us at: 9. If you would like to participate in the submission process, receive quarterly press releases, or have questions about our venture capital criteria, please contact us at: Gavin Penny gavin.penny@thomsonreuters.com Tel: