US Private Investment in Canada Reaches 56% of All Deals in 2021

Private Equity Funds Invested into Canada from US Grows by 50%

Private equity deals invested by U.S. Companies into Canada, has grown by more than 50% over the past five years, totalling $33.8 billion during the year 2021. This follows, the recent published data where U.S. private investors comprise of a total ownership share of 56 per cent of all private equity deals conducted in Canada.

As expected there are good reasons by why the investment market is seeing this deal flow growth, which include a healthy dynamic American market, the geographical proximity, and the attractive Canadian dollar.

There are some drawbacks to take into consideration, as it is normal procedure private equity companies do sell their investments, and as a result the majority of proceeds tend not to stay local or in the Country.

Another consideration from analysts is that many Canadian businesses are easier to acquire, given their characteristics of being undervalued under the Canadian marketplace size, which inhibits lower and less investments than that of the US.

Furthermore, the expected rise in U.S. interest rates it is expected to drive more American private equity companies into the Canadian marketplace. Which in turn capital funding for Canadian investors are less attractive, subsequently valuations of Canadian companies will be lower.

The previous investment trends, was that the US private equity companies often invested alongside other Canadian institutional investors, however as recent data shows, new and bigger deal flow in Canada is being conducted solely by US companies.

One of the benefits for Canada being attractive, is that the US private equity companies see their presence and operations in a trustworthy and tested market as a strategy for their continued growth and by also being established in the Canadian market.

Private Equity is Attracted by Innovation

As expected most U.S. private equity firms are always being analysed for their performance and how fast they can deploy capital and generate returns. The Canadian marketplace offers these companies an attractive proposition for continued growth and bigger returns.

In 2021, there was a record 771 completed deals, totalling $18 billion, as released by the Canadian Venture Capital and Private Equity Association.