Cross-border private equity activity remains high in Canada, despite mounting trade-related fears since the onset of the Donald Trump administration. Canadian PE activity involving US investors is moving at a healthy pace in 2017, according to PitchBook's latest Canadian PE & VC Breakdown. The 163 deals through 3Q that involve US firms have put this year on pace to hit a new high, potentially breaking the record of 216 deals set in 2015. More surprising, however, is the drop-off in purely Canadian activity, which is not expected to match last year’s levels. In other words, US investors are more excited than Canadians are about PE in Canada.
To be sure, this isn't an entirely new trend; US-based investors have largely been behind the recent surge in Canadian PE activity since the financial crisis. Canada’s own PE ecosystem has grown in fits and starts through the years, and annual fundraising numbers are heavily influenced by the handful of larger Canadian firms that happen to be fundraising that year. Just six Canada-based PE funds have closed in 2017, raising roughly C$3 billion in commitments. Meanwhile, US-based PE fundraising has been on a tear, and investors looking to deploy dry powder have set their sights north for deals.
It's becoming clear how heavily influenced the Canadian market is to outside investors in 2017. Of the country's C$47 billion in PE investment so far this year, more than C$30 billion of that total comes from deals without any Canadian involvement. That amounts to at least 64% of purely foreign investment, a percentage that has hovered below half for the last decade. Consider us a bit surprised for now.