Q-News

March 2011

Private Equity - March 2011

Posted in Private Equity

There were 15 transactions reported during March with eleven of them disclosing the amount of capital that was raised, totaling $305 million in funding.  However, $183 million of that amount went to two transactions in the energy space, a renewable energy plant which raised $143 million and an oil sands developer that raised $40 million.  Once we adjust for these two transactions, we find that March represented a nice increase when compared to the 10 deals and $70 million in new capital reported during February 2011 and the 12 deals and $65.9 million announced in March of 2010. But it should be noted that adjusting for a $50 million raise by Kobo brings the numbers virtually flat with these comparable periods. 

Most of March’s reported activity took place in Ontario and Quebec with four announcements coming out of each of those provinces while the remaining three deals took place in British Columbia.   Seven of the Canadian companies financed this March qualify as technology companies with the remaining eight involved in construction, oil and gas, retail, and clean tech.  There were five deals reported involving Canadian players investing outside of the country – two of the investments were made in California while the remaining three took place in New York, New Jersey, and Ireland.


Financings of Canadian Companies

British Columbia’s Nexterra, a developer and manufacturer of gasification systems that generate renewable heat and power for institutional and industrial customers, secured $15 million in equity financing from two funds: the Tandem Expansion Fund, a large growth equity fund focused on small and mid-sized technology companies in Canada and return investor Arc Financial, a Calgary-based investment firm that specializes in the energy sector.  Nexterra has raised approximately $55 million from private sector funds and government programs since 2003.  

The Caisse de dépôt et placement du Québec and Capital régional et coopératif Desjardins announced four Quebec-based investments during March totaling $23 million.  The first investee company was GGI International of Lachine, which designs and manufactures user interfaces for aeronautics, point-of-sale systems, medical equipment, industrial facilities, and other verticals.  The second investment involved Groupe Fillion Sports, a Rimouski-based retailer of footwear and sportswear.  The third investment was Systemex, a Montreal-based company that provides engineering and installation services to the telecom industry.  The last company receiving capital from the two Quebec-based investors was Montreal’s STC Footwear, which manufactures and imports safety boots that it sells throughout North America.  The funds did not disclose financing or term details however we do know that Groupe Fillion Sports, Systemex and STC Footwear received their money from the Capital Croissance PME fund, managed by Desjardins, which claims not make any investments of less than $3 million.

Edmonton’s Petrospec Engineering, a provider of oilfield engineering services, has raised an undisclosed amount of funds from HSBC Capital (Canada).

 

US and International Activity in Canada

Waterloo’s Kik Interactive, the developer of a mobile application that allows real-time instant messaging and photo sharing, raised $8 million in a Series A financing round. The investors were RRE Ventures (NY), Spark Capital (MA) and Union Square Ventures (NY).

Toronto-based North Plains, whose software allows agencies and large enterprises to publish online content and manage their digital and media asset, raised an undisclosed amount of growth equity funding from Accel-KKR (CA).

Toronto’s Kobo raised $50 million in third round financing from Boston-based Fidelity Investments, Cheung Kong Holdings (Hong Kong), and return investor Indigo Books, which maintained its majority stake in the company by contributing $13 million of the new capital.  Kobo started out as an e-book distribution platform, but has since come out with its own e-reader device.  The company was formed in December 2009 when it was spun out of Indigo which launched the Shortcovers technology.  The company had previously raised $32 million through two $16 million financings, one in December of 2009 and the other in December of 2010, involving Indigo, Cheung Kong Holdings, Michigan-based Borders Group (NYSE: BGP), and REDgroup Retail of Australia.  Borders Group and REDgroup Retail have both filed for bankruptcy since the last financing.

Plasco Energy Group, an Ottawa company that uses its patented Plasco Conversion System to turn waste into renewable energy, raised $140 million from NY-based Soros Fund Management. Proceeds from the financing will be used to fund commercial projects in Canada, the United States, the United Kingdom, Poland, the Caribbean, and China.  The financing brings the total amount of private capital raised by the company to $385 million.  The company’s most recent round was a $110 million raise in July of 2010 led by Ares Management.  Additional private sector players that participated in earlier rounds include US-based Black River Asset Management (MN), RAB Capital (UK), and Hera Holdings (Spain), as well as Canadian-based Killick Capital (Newfoundland), and Rose Corporation (Toronto).  Plasco has also raised approximately $24 million from the public sector in the form of a $9.6 million grant from Sustainable Development Technology Canada, a $10 million loan from the EDC, and $4 million debt financing from Ontario’s Ministry of Research and Innovation.

Calgary’s Dirtt Environmental Solutions raised $22 million.  The company manufactures customized interior walls, doors, and flooring using environmentally conscious production methods, including the use of advanced software to optimize the utilization of raw materials.  The financing was led by NY’s Expansion Capital Partners. California’s NGEN Partners, Illinois-based Apex Venture Partners, Minnesota’s North Sky Capital, and the EDC also participated in the deal.

The Plumbline Group of Companies, a Calgary-based subcontractor to the Canadian construction industry specializing in concrete and masonry work announced that Longroad Asset Management of Connecticut has become the company’s majority shareholder.  Plumbine operates five different divisions: ASTY Construction, Con-Forte Contracting Company, Four Star Concrete and Construction, Plumbline Residential Services, and Sas-Can Masonry and Restoration. Longroad is a special situations fund that specializes in distressed investments.

Indochino, a Vancouver company that designs custom suits and sells them through its website, raised $4 million from first time investor Madrona Venture Group (WA) and returning investor Burda Digital Ventures (Germany), which had previously provided the company with approximately $290K in seed financing.

Warburg Pincus and Blackstone Capital Partners participated in a $40 million raise announced by Calgary’s Osum Oil Sands with a third investor being Calgary-based Camcor Partners.  Osum is a Calgary-based oil company focused on environmentally friendly recovery techniques in the oil sands.  The company had previously raised $100 million from the Korea Investment Corporation in November of 2010. 

Accel Partners, along with several high profile private investors provided seed capital to Vancouver-based Summify.  The company has built a platform that it hopes will displace RSS feeds by e-mailing users stories that they could read based on what their friends are discussing through social networking. 

 

Canadian Investments Abroad

Wellington Financial extended a $6 million venture loan to Invision, a New York-based company that provides ad management software and consulting services to media companies.  Invision is backed by ABS Capital Partners and Garvin Hill Capital Partners. 

California-based xMatters raised debt financing from Toronto’s MMV Financial.  xMatters, founded in 2002 as AlarmPoint, provides companies with relevance engine software that works together with their customers’ applications, processes, and systems to optimize the flow of information to their employees as well as external stakeholders.  The company, whose principal VC investor is JMI Equity, also has a European office in the UK and an Asia Pacific office in Australia.   

Alberta Investment Management Corporation was one of the new investors participating in a $72 million raise by Alta Devices, a California-based company that intends to use the capital to begin commercial production of its next-generation thin film solar cell technology. The other new investors were Constellation Energy (MD), Good Energies (NY) and Energy Technology Ventures (CA). Several returning investors also participated in the raise. 

The Canadian Pension Plan Investment Board announced that they will be providing $266 million to AWAS, an Ireland-based aircraft leasing firm. The investment raises the fund’s ownership stake in the company to 25%.  AWAS owns more than 200 aircraft that it leases to clients in 85 countries.

Wellington Financial reported that it will provide $8 million in venture debt to NJ-based Mformation Technologies.  Mformation’s technology allows mobile operators to manage their customers’ access to data on their cell phones.  Mformation had previously raised equity capital from Battery Ventures, Carmel Ventures, Intel Capital, North Bridge Venture Partners, and Visa International.

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