Private Equity in Canada: Recent Developments and Selected Issues

Private equity activity in Canada has, as in the U.S. and elsewhere, continued to suffer the effects of the relatively weak investment environment that has persisted since 2001. Nevertheless, the total amount of capital committed to private equity in Canada rose by the end of 2003 to C$48.6 billion (an increase of over C$8 billion from 2002). Of this amount, the buyout and the venture capital sectors comprised approximately 47% each, with the remaining 6% being accounted for by the mezzanine debt sector.

Private independent fund managers re p resented 36% (C$17.5 billion) of the total capital, followed by institutional investors at 32% (C$15.4 billion) committed to private equity in 2003, labor-sponsored venture capital corporations and provincial venture capital corporations at 19% (C$9.2 billion), corporate funds (i.e., divisions or subsidiaries of Canadian financial or industrial corporations) at 8% (C$4.1 billion) and government funds at 5% (C$2.5 billion).