CANADIAN PRIVATE EQUITY BUYOUT REVIEW

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1 CANADIAN PRIVATE EQUITY BUYOUT REVIEW First Three Quarters 2015 REUTERS / Todd Korol

2 Table of Contents Canada s PE Buyout Market in First 3Q $ 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 Three Quarters 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 three quarters of Disclosed values of transactions (announced and completed) totaled $16.1 billion as of September 30th, already exceeding the full year totals for three of the past four years. A total of 306 deals were done in the first nine months, on pace with the number of deals completed over the same period last year. The $8.0 billion invested in the third quarter was down substantially from Q3 last year, when Burger King completed its $12.5 billion PE-backed acquisition of Tim Hortons, but still nearly matched the amount invested in Canadian companies in the first half. 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 nine months of this year, doubling from a low of 14% in Top deals included Teachers $3.3 billion acquisition of Heritage Royalty, CI Capital Partners acquisition of KIK Custom Products for $2.1 billion, and Brookfield Asset Management s investment in Brookfield Residential Properties for $1.1 billion. At the end of September, eight large-cap transactions sized $500 million or greater captured 62% 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 23%, 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 three quarters with 54 transactions, or 18% of the national total. Software & Mining companies followed second and third with 42 and 33 deals respectively. When measured by disclosed deal values, Oil & Gas and Consumer-Related companies dominated the largest transactions with $6.2 billion and $2.2 billion respectively. Mining companies came in third place, attracting $1.7 billion in investment. 3

4 Overview of Canadian PE Buyout Market Activity in First Three Quarters 2015 Canadian market trends by region The majority of buyout-pe transactions (announced and completed) in the Canadian market in the first three quarters of 2015 involved businesses that were located in Québec (44%) and Ontario (32%). Ontario demonstrated the most growth over the first nine months of 2014, however, with 97 deals, a 33% increase. The number of deals done decreased in all other Canadian provinces and regions. Though the number of deals done in Alberta declined in the first nine months, the province attracted the half of the top eight deals for the first nine months, securing $7.5 billion. Ontario-based companies attracted the second largest share, with $5.5 billion, followed by Quebec companies with $2.7 billion. Canadian investor activity in global markets Canadian buyout and related PE funds were substantially more active in international transactions in the first nine months relative to the year before. As of September 30th, Canadian funds led or participated in a total of 113 deals in other countries, and these were valued at approximately $124.7 billion. This compares against a total of 83 deals valued at only $8.9 billion in the first three quarters of last year. The largest foreign targets of Canadian buyout firms included CPPIB s acquisition of Antares Capital, CDP s acquisition of PetSmart, and Brookfield s investment in Australian transportation company Asciano. As with pervious periods, Canadian investment abroad was dominated by companies based in the United States. Of the 113 deals done, 65% were in American companies, and these deal values totaled $53.8 billion, or 43% of total deal values. Canadian PE firms led or participated in 24 deals over $1 billion in the first nine months, substantially exceeding the 15 such deals made by Canadian investors in the entire 2007 year, previously the best year on record for foreign large-cap dealmaking. Trends in Canadian buyout-pe fund-raising The fundraising activities of Canadian buyout funds maintained strong levels in the first nine months of 2015 with a total of $6.8 billion of new capital committed. Though only 46% of the $14.7 billion raised in all 2014, this was still a reasonable 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 $16 Billion First 3Q Already Exceeds Full Years $35 $30 $31.0 $25 $20 $15 $10 $12.0 $11.7 $10.3 $16.1 $5 $ Q1 Q2 Q3 Q4 5

6 Number of Deals Buyout - PE Deal Volumes Hold Steady Second Best First 3Q on Record Behind Q1 Q2 Q3 Q4 6

7 Number of Deals More Companies Turning to PE as Fewer Canadian Targets Acquired in Conventional M&A % % 25% % % % 50 5% First 3Q % Number of Deals % of M&A Activity 7

8 Number of Deals Canadian Investors Funding Fewer Domestic Deals Down 9% From First 3Q Last Year First 3Q 2015 Domestic Lead Investor Foreign Lead Investor 8

9 Top Canadian PE Buyout Deals First Nine Months 2015 Company Province Value (CAD $ Millions) Disclosed Investors Heritage Royalty AB $3,300 Ontario Teachers Pension Plan KIK Custom Products ON $2,111 CI Capital Partners 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 QC $657 Temasek Holdings, CEF Holdings Brookfield Asset Management, KERN Partners, ARC Financial BayBridge Seniors Housing ON $578 Ontario Teachers Pension Plan 9

10 Eight Largest Buyout-PE Transactions Take 62% of Dollars Deal Size Range # of Deals Done Dollars Invested (Disclosed) > $1 Billion 3 $6,525 Million (41%) $500 Million - $1 Billion 5 $3,362 Million (21%) $100 Million - $500 Million 14 $3,634 Million (23%) $10 Million - $100 Million 52 $2,194 Million (14%) < $10 Million 118 $341 Million (2%) Deal Values Undisclosed 114 $0 (0%) Total Deals With Disclosed Values: 192 (of 306) Total Invested: $16.1 Billion 10

11 Manufacturing & Software Companies Lead in First 3Q With 18% & 14% of Deals Manufacturing Software Mining Oil & Gas Consumer Related Finance Healthcare & Life Sciences Transportation Energy & Environmental IT & Media Construction & Engineering Hospitality & Entertainment Business Services Distribution & Wholesale Agriculture & Forestry Total Deals:

12 Oil & Gas, Consumer-Related Investments Drive Deal Values in First 3Q Oil & Gas Consumer Related Mining Manufacturing Construction & Engineering Healthcare & Life Sciences Energy & Environmental Hospitality & Entertainment Software Finance Transportation IT & Media Distribution & Wholesale Business Services Agriculture & Forestry Total Deal Values: $16.1 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 33% Over Last Year British Columbia Alberta Ontario Quebec Rest of Canada First 3Q 2014 First 3Q

14 Amount Invested (CAD $ Billions) # of Deals Canadian Investors, Non-Canadian Companies Canadian PE Investment Beyond Canada Skyrockets Funds Invest in 24 Deals Over $1 Billion YTD $60 50 $50 $45.3 $ $40 $30 $20 $10 $0 $30.5 $15.6 $11.1 $4.1 $5.3 $2.9 $1.3 $2.2 $1.4 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q Total Deal Values, Including All Investors # of Deals 14

15 Canadian Funds Investments Abroad First Nine Months 2015 Rank Company Name Location Deal Value (C$ Bil) Industry Canadian Investors (Disclosed) 1 Antares Capital Fairfield, CT $15.8 Finance CPPIB 2 PetSmart Phoenix, AZ $11.1 Retail La Caisse de dépôt et placement du Québec 3 Asciano Sydney, Australia $11.0 Transportation Brookfield Asset Management 4 Fortum Distribution AB Espoo, Finland $8.9 Infrastructure Borealis Infrastructure 5 Homeplus Tesco Seoul, South Korea $8.1 Retail CPPIB, PSP Investments 6 Informatica Redwood, CA $6.9 Information Technology CPPIB 7 SIG Combibloc Group Neuhausen, Switzerland $6.0 Manufacturing Onex Corporation 8 FullTDF SAS Montrouge, France $5.6 Telecommunications 9 O2 10 Canary Wharf Group Berkshire, United Kingdom London, United Kingdom $5.2 Telecommunications Brookfield Infrastructure, PSP Investments CPPIB, La Caisse de dépôt et placement du Québec $4.7 Infrastructure Brookfield Property Partners 15

16 # of Exit Events Canadian PE Exits Down 2% From First 3Q 2014 Trade Sales Comprise 60% of Exits Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 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 $6.8 $ First Nine Months

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 Wednesday, October 21st, 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: