Record breaker: VC investment in Canada hits $11.8bn, reveals new report

BY Fraser Tennant

Canadian venture capital (VC) investment has hit record levels in 2021, with a year-to-date (YTD) total of CA$11.8bn, according to a new report by the Canadian Venture Capital & Private Equity Association (CVCA).

The YTD total, which includes $3.5bn invested across 174 deals in the third quarter (Q3), propelled 2021 beyond the previous highest annual VC investment of $6.2bn recorded in 2019.

In its report, ‘Q3 2021 Canadian Venture Capital Market Overview’, the CVCA reveals that the average deal size is a record-setting $20.7m – approximately double the $11m recorded in 2019 and the previous highest year on record. Moreover, the average growth-stage investment YTD in Q3 2021 was $129m, which has more than tripled over the last three years.

In addition, investments into later and growth-stage companies have received 63 percent of total VC dollars invested in Q3 2021, a significant increase from prior years (50 percent in 2019 and 49 percent in 2020).

In terms of deal size, there were 55 megadeals ($50m-plus) YTD, accounting for 74 percent of investment in 2021 so far. Notable megadeals in Q3 included Vancouver-based Dapper Labs’ $319m closing, Toronto-based Clearco’s $270m funding and the $265m investment in Montréal-based Blockstream.

“Investment in Canada’s startups has never been stronger,” said Kim Furlong, chief executive of the CVCA. ​“With the recent crop up of new continuation funds and the average growth stage investment rising, we are seeing a willingness to hold with investors as they stay the course in their investments — a testament to the maturing Canadian venture ecosystem.”

Concurrent with its 2021 VC investment analysis, the CVCA has also published a report into private equity investment in Canada over the same period – ‘Q3 2021 Canadian Private Equity Market Overview’ – which reveals a YTD total of $13.2bn invested across 584 deals.

“We are on the journey through post-pandemic recovery,” concluded Ms Furlong. ​“Some of the performance figures we are seeing in Q3 are trending towards pre-covid levels. The consumer and retail sector, for example, has seen some significant investment growth, at almost five times the levels experienced since a low in 2018.”

Report: Q3 2021 Canadian Venture Capital Market Overview

Qualcomm and SSW Partners agree $4.5bn Veoneer deal

BY Richard Summerfield

Chip manufacturer Qualcomm and newly formed private equity firm SSW Partners have agreed to acquire Swedish automotive technology group Veoneer for $37 a share in a deal worth $4.5bn.

The deal for Veoneer ends the ongoing battle for the company which had been a target for both Qualcomm and Magna International Inc, a Canadian mobility technology company. In July, Magna made an offer worth around $3.8bn for Veoneer which was accepted by Veoneer’s board. As a result of the agreed Qualcomm/SWW deal, Veoneer has terminated its prior acquisition agreement with Magna, which means Veoneer will pay a termination fee of $110m to Magna.

The boards of Veoneer and Qualcomm have both approved the transaction and expect it to close next year. Under the terms of the deal, at closing, SSW Partners will acquire all of the outstanding capital stock of Veoneer, shortly after which it will sell Veoneer’s autonomous-driving software operation, known as Arriver, to Qualcomm and retain Veoneer’s Tier 1 supplier businesses. SSW will also seek owners for the rest of Veoneer’s businesses. The Arriver business emerged from a collaboration between Qualcomm and Veoneer first announced in August 2020. The transaction is the first deal for SSW Partners.

“Qualcomm is the natural owner of Arriver,” said Cristiano Amon, president and chief executive of Qualcomm. “By integrating these assets, Qualcomm accelerates its ability to deliver a leading and horizontal ADAS solution as part of its digital chassis platform. We believe that this transaction and structure benefits both Qualcomm’s and Veoneer’s shareholders, positions all of Veoneer’s businesses for success and provides a compelling opportunity to customers and employees.”

“This transaction creates superior value for our shareholders,” said Jan Carlson, chairman, president and chief executive of Veoneer. “It also provides attractive opportunities to our Arriver team at Qualcomm and allows our other businesses to find long-term industrial partners where they can continue to develop.”

“We are excited to partner with Qualcomm to acquire Veoneer,” said Antonio Weiss and Josh Steiner of SSW Partners. “While Qualcomm focuses on the Arriver business, we will focus on finding strong, long-term strategic homes for the rest of Veoneer’s businesses – we are committed to ensuring that Veoneer’s employees prosper, the businesses continue to innovate and grow and customers continue to have uninterrupted access to the outstanding service and quality for which Veoneer is known. We have high regard for Veoneer’s management team and look forward to partnering with them to ensure a successful outcome for all stakeholders.”

News: Qualcomm, SSW Partners to buy Veoneer in $4.5 billion deal

Packable strikes $1.55bn SPAC deal

BY Richard Summerfield

Ecommerce marketplace enablement platform Packable has entered into a definitive agreement to merge with Highland Transcend Partners Corp, a special purpose acquisition company (SPAC), in a deal worth $1.55bn.

Packable, which is backed by private equity firm The Carlyle Group, was valued at around $1.1bn in November 2020 when Carlyle invested $250m to acquire its stake in the company.

Under the terms of the deal, Packable’s existing shareholders will receive 71 percent of the combined company, Highland Transcend SPAC founders and investors will own 19 percent, while private investment in public equity (PIPE) investors, including Fidelity Management & Research Company, Lugard Road Capital, Luxor Capital, Park West Asset Management and Morningside, will receive the remaining 11 percent.

“This is an incredibly exciting time for our team, and we are thrilled to partner with Highland Transcend as we plan to enter our next chapter as a public company,” said Packable co-founder and chief executive Andrew Vagenas. “While we’ve become a market leader in our industry, there is significant runway ahead of us in multiple avenues: from the continued proliferation of online marketplaces and geographic opportunities to our ability to invest in and grow Digitally Native Brands, while providing new data and technology services, as well as marketing options for our brand partners.”

“While we believe that third-party marketplaces will contribute more than 40 percent of all ecommerce revenues by 2025, brands find themselves challenged to manage the complexity of executing across these platforms,” said Ian Friedman, chief executive of Highland Transcend. “Packable has a leading software-driven offering enabling brands to grow their businesses across multiple online marketplaces. Andrew and the entire team have built an incredibly strong competitive platform; with approximately 75 million customer transactions to-date, we believe that Packable has one of the largest sets of third-party marketplace transaction data, outside of the marketplaces themselves. This data enables Packable’s competitive pricing, merchandising, and marketing decisions and will allow the company to launch a Software-as-a-Service offerings in the future.”

News: Carlyle-backed Packable agrees $1.55 billion SPAC merger

Cornerstone taken private in $5.2bn deal

BY Richard Summerfield

Private equity firm Clearlake Capital is to take cloud computing and management software provider Cornerstone OnDemand private in a deal worth $5.2bn.

Under the terms of the deal, Cornerstone shareholders will receive $57.50 per share in cash, a 15 percent premium over the stock’s closing price on the day before the deal was announced last week.  The transaction is expected to close in the second half of 2021, subject to customary closing conditions, including the receipt of regulatory approvals and approval by a majority of Cornerstone stockholders. Certain stockholders, including Clearlake, representing 15.65 percent of the company’s outstanding shares, have agreed to vote their shares in favour of the transaction.

“Clearlake’s investment reflects their confidence in our talented people, the power of our SaaS solutions and our value proposition for our customers,” said Phil Saunders, chief executive of Cornerstone. “With this transaction, we plan to continue to pursue new software capabilities that advance our customers’ efforts to optimize workforce agility, transform skill development, deliver personalized, engaging growth experiences, and align their organizations around a shared definition of success. We’re thrilled to welcome Clearlake as a partner that appreciates the impact our SaaS solutions have on the lives of people at work and our customer-centric philosophy as we accelerate our innovation.”

“We have long admired Cornerstone’s leading talent management SaaS solutions and the Company’s mission to help customers modernize the learning and development experience for their employees,” said Behdad Eghbali, co-founder and managing partner at Clearlake. “We believe there is a significant opportunity to strategically position Cornerstone in the market as a buy-and-build platform and industry consolidator, and we look forward to partnering with the management team to drive value through both organic growth acceleration and inorganic transformation.”

Cornerstone also reported its second-quarter earnings last week, recording $214.3m in revenue, with 97 percent coming from subscriptions, and representing a 16.3 percent year-over-year increase. The company has more than 6000 customers and 75 million users, and its software is available in 180 countries and 50 languages. Cornerstone went public in 2011.

News: Clearlake Capital to take Cornerstone OnDemand private for $3.8 billion

Advent sells Allnex for $4.75bn

BY Richard Summerfield

US private equity firm Advent International has agreed to sell German coating resins manufacturer Allnex to PTT Global Chemical for $4.75bn. The deal is expected to close in Q4 2021, subject to regulatory approvals.

Allnex has around 4000 employees worldwide and manages a global production network of 33 state-of-the-art manufacturing sites and 23 research and technology facilities. The company has been pioneering sustainable innovations for the coatings industry for over 70 years and focuses on environmentally friendly technologies, such as waterborne industrial resins, powder resins, energy curable resins and high-solids technologies. The company has annual revenue of around €2bn.

Advent acquired Cytec Industries’ coating resins business in 2013, rebranded it Allnex and merged it with Nuplex in 2016.

“We are proud of the success we have had in building allnex into a global player and are very grateful to Advent for its strong support and excellent partnership over the past years,” said Miguel Mantas, chief executive of Allnex. “In order to build on our leading market position, we will continue to invest in innovative technologies and look to expand our presence in APAC. With its resources, industrial network and expertise, PTT Global Chemical will represent an extraordinary opportunity to take the next steps in the development of our business.”

“Over the past eight years, we have supported allnex’s management team in transforming the company from a corporate carve-out into the number one global producer of industrial coating resins,” said Ronald Ayles, managing partner and head of the global chemicals and materials practice at Advent. “Our significant investment in growth lead to an impressive track record – especially in green technologies. With PTTGC, we have now found the ideal partner to support allnex’s next phase of growth and to continue its success story.”

“In line with our vision to become a leading global chemical company while improving people’s quality of life, as well as our core strategies to drive new sustainable growth opportunities, we are pleased to announce PTTGC International (Netherlands) B.V., a PTTGC wholly owned subsidiary, invests in allnex, a business with outstanding innovation, history and promise, to establish a stronger position internationally,” said Dr Kongkrapan Intarajang, chief executive of PTTGC.

New: Advent sells coating resins maker Allnex to Thailand's PTTGC