Canadian VC and PE markets return to pre-pandemic levels, reveals new report

BY Fraser Tennant

Canadian venture capital (VC) and private equity (PE) markets returned to pre-pandemic levels in the first half of 2022, with PE investment almost doubling, according to a new report by the Canadian Venture Capital and Private Equity Association (CVCA).

In its ‘H1 2022 VC and PE Canadian Market Overview’, the CVCA reveals that C$1.65bn was invested across 182 deals in the second quarter of 2022, bringing the total for the first half of the year to C$6.2bn invested across 371 deals.

In terms of mega-deals, eight deals worth C$50m-plus closed in Q2 2022, valued at C$799m, bringing the total for the first half of 2022 to C$4bn closed across 25 deals. Moreover, investment in the early stages in Q2 remained strong, with the highest seed stage investment and deal count on record: C$263m across 104 deals.

“VC investment performance is mirroring the 2020 market,” said Kim Furlong, chief executive of the CVCA. “In choppy waters, we need to continue to ensure Canadian companies have access to capital. Programmes like the federal government’s Venture Capital Catalyst Initiative (VCCI) will be essential to help weather unpredictability.”

Sector-wise, information, communications & technology received two-thirds of all investment in the first half of 2022, with C$4.1bn invested across 205 deals. The life sciences sector received 10 percent of investment with C$622m across 55 deals.

As far as PE activity is concerned, deals under C$25m continue to make up the largest percentage of Canadian PE activity, with 87 percent of disclosed deals in the first half of 2022 in this category. Moreover, the average deal size continues to decrease steadily, reaching an all-time low in Q2 of C$11.81m.

“Private markets are normalising to pre-pandemic levels,” added Ms Furlong, chief executive of the CVCA. ​“After an outlier 2021, investors are closely monitoring macroeconomic volatility and public market trends, which are impacting the private capital investment environment. While the landscape is more challenging as we head into the second half of 2022, PE investors continue to actively invest and largely in Canada’s small and medium enterprises (SMEs).”

The industrial and manufacturing sector saw the most PE investment activity in H1 – C$1.36bn over 101 deals – followed by information and communications technology, C$998m over 77 deals, and the life sciences sector, C$87m over 55 deals.

Ms Furlong concluded: “In a lot of ways, 2021 was an abnormal year, particularly when it came to company valuation. What we are seeing now, is the correlation between the decrease in public markets slowly permeating the private markets.”

Report: H1 2022 VC and PE Canadian Market Overview

Drugmaker Endo files for Chapter 11 amid opioid battles

BY Fraser Tennant

In a bid to weather a wave of opioid lawsuits, pharmaceutical company Endo International has filed for Chapter 11 bankruptcy as part of restructuring support agreement (RSA) with senior secured debtholders.

The company said that it initiated Chapter 11 proceedings to facilitate a sale process and provide an appropriate forum for bringing closure to opioid-related and other uncertainties, without recourse to costly and time-consuming litigation.

Under the terms of the RSA, the debtholder group has committed to providing total purchase consideration of approximately $6bn in the form of a credit bid, plus assumption of certain liabilities, for substantially all of Endo’s assets.

The RSA  will allow the company to advance its business transformation with a strengthened balance sheet to create compelling value for its stakeholders over the long term.

In addition, Endo has filed with the bankruptcy court a series of customary motions to maintain business-as-usual operations on all fronts and uphold its commitments to its stakeholders, including team members, customers, suppliers and business partners, during the Chapter 11 process.

Endo's India-based entities are not part of the Chapter 11 proceedings.

“The Chapter 11 process will enable us to continue our ongoing business transformation, including investing in our core areas of growth, as we work to execute a transaction to strengthen our balance sheet and secure a strong tomorrow,” said Blaise Coleman, president and chief executive of Endo. "By definitively addressing more than $8bn of debt that has burdened our balance sheet and establishing a pathway to closure with respect to thousands of opioid-related and other lawsuits, we will be able to move forward as a new Endo and reach our full potential."

Founded in 1997, Endo is a specialty pharmaceutical company committed to helping everyone it serves to live their best life through the delivery of quality, life-enhancing therapies. The company has global headquarters in Dublin, Ireland, with its US corporate office in Malvern, Pennsylvania.

“Our commitment to our mission, team members, customers, patients and communities will not change,” concluded Mr Coleman. “We look forward to emerging from this process better positioned to continue helping everyone we serve live their best lives.”

News: Endo files for bankruptcy as U.S. opioid litigation drags

Altera Infrastructure files for Chapter 11

BY Fraser Tennant

In a move designed to deleverage its balance sheet and position it for long term growth and success, global energy infrastructure services group Altera Infrastructure has filed for Chapter 11 bankruptcy so that it may implement a restructuring support agreement (RSA).

The RSA has been signed, or agreed to in principle by, holders of 80 percent of its funded debt obligations, which includes Brookfield Business Partners and approximately 91 percent of its bank lenders pending certain creditors’ internal credit approval processes.

The terms of the RSA contemplate more than $1bn of secured and unsecured holding company debt, $400m of preferred equity and $550m of secured asset-level bank debt, a comprehensive reprofiling of Altera’s bank loan facilities to better align cash flow with debt service obligations and the continued support of Altera’s equity sponsor, Brookfield.

In addition, Altera has obtained a commitment from Brookfield for a $50m debtor in possession (DIP) financing to help fund Altera’s restructuring process and ensure ordinary course operations remain unimpaired during the Chapter 11 process.

In conjunction with the petitions Altera has filed a series of motions, which, once approved by the bankruptcy court, will enable Altera to operate its business in the ordinary course without interruption. “We enter into this phase of our balance-sheet restructuring with the support of the majority of Altera’s secured lenders and equity sponsor Brookfield,” said Ingvild Sæther, chief executive of Altera Infrastructure Group Ltd.

A leading global energy services provider to the oil and gas industry, Altera focuses on supplying critical infrastructure assets to its customers in the offshore oil and gas regions of the North Sea, Brazil and the East Coast of Canada.

Altera’s fleet of 41 vessels includes floating production, storage and offloading units, shuttle tankers, long-distance towing and offshore installation vessels, as well as a unit for maintenance and safety.

Ms Sæther concluded: “We are confident that the Chapter 11 process will result in a comprehensive recapitalization transaction that will not only stabilise liquidity, but also deleverage our balance sheet and better position Altera for future growth.”

News: No impact to employees as Altera Infrastructure announces Chapter 11 bankruptcy

Pfizer to acquire Global Blood Therapeutics in $5.4bn deal

BY Fraser Tennant

In a deal that enhances its presence in rare haematology, US multinational pharmaceutical and biotechnology corporation Pfizer Inc. is to acquire biopharmaceutical company Global Blood Therapeutics, Inc. (GBT).

Under the terms of the definitive agreement, Pfizer will acquire all the outstanding shares of GBT for $68.50 per share in cash, for a total enterprise value of approximately $5.4bn, including debt and net of cash acquired.

The acquisition complements and further enhances Pfizer’s more than 30-year heritage in rare haematology and reinforces the company’s commitment to sickle cell disease (SCD) by bringing expertise and a leading portfolio and pipeline with the potential to address the full spectrum of critical needs in this underserved community.

A lifelong, debilitating inherited blood disorder characterised by haemolytic anaemia, acute pain crises and progressive end organ damage, SCD impacts millions of people worldwide, predominantly in populations of African, Middle Eastern and South Asian descent.

“This transaction is an exciting milestone that accelerates GBT’s mission to discover, develop and deliver life-changing treatments that provide hope to underserved patient communities,” said Ted W. Love, president and chief executive of GBT. “Pfizer will broaden and amplify our impact for patients and further propel much-needed innovation and resources for the care of people with SCD and other rare diseases, including populations in limited-resource countries.”

Pfizer intends to continue to build on GBT’s shared commitment to and engagement with the SCD community by accelerating distribution of its innovative treatment – voxelotor tablets – to parts of the world most impacted by SCD.

“The deep market knowledge and scientific and clinical capabilities we have in rare hematology will enable us to accelerate innovation for the SCD community and bring treatments to patients as quickly as possible,” said Albert Bourla, chairman and chief executive of Pfizer. “We are excited to welcome GBT colleagues into Pfizer and to work together to transform the lives of patients, as we have long sought to address the needs of this underserved community.”

The boards of both companies have unanimously approved the transaction, which is subject to customary closing conditions, including receipt of regulatory approvals and approval by GBT’s stockholders.

Mr Love concluded: “We look forward to working together with Pfizer to serve our communities and advance our shared goal of improving health equity and expanding access to life-changing treatments to create a healthier future for all.”

News: Flush with cash, Pfizer buys Global Blood Therapeutics in $5.4 billion deal

iRobot acquired by Amazon

BY Richard Summerfield

iRobot Corporation, a company which designs and builds consumer robots, has agreed to be acquired by Amazon in an all-cash transaction valued at $1.7bn including net debt.

According to a statement announcing the deal, Amazon will pay $61 per share to acquire the company. The agreed price represents a premium of 22 percent to the stock’s last closing price of $49.99. Completion of the transaction is subject to customary closing conditions, including approval by iRobot’s shareholders and regulatory approvals. On completion, Colin Angle will remain as chief executive of iRobot.

“We know that saving time matters, and chores take precious time that can be better spent doing something that customers love,” said Dave Limp, senior vice president of Amazon Devices. “Over many years, the iRobot team has proven its ability to reinvent how people clean with products that are incredibly practical and inventive—from cleaning when and where customers want while avoiding common obstacles in the home, to automatically emptying the collection bin. Customers love iRobot products—and I’m excited to work with the iRobot team to invent in ways that make customers’ lives easier and more enjoyable.”

“Since we started iRobot, our team has been on a mission to create innovative, practical products that make customers’ lives easier, leading to inventions like the Roomba and iRobot OS,” said Mr Angle. “Amazon shares our passion for building thoughtful innovations that empower people to do more at home, and I cannot think of a better place for our team to continue our mission. I’m hugely excited to be a part of Amazon and to see what we can build together for customers in the years ahead.”

Amazon has undertaken a significant push toward robotics and connected devices of late. The company is increasing its efforts to transform its Alexa-enabled smart devices from stationary objects into mobile machines. Amazon has its own mobile robot, which is currently only available for purchase via invitation. The company also offers its own flying security drone called the Always Home Cam, which is available through its Ring business.

The quantity of data which Roomba vacuums collect on households will no doubt be extremely valuable to Amazon as it continues to roll out more smart devices. However, the deal has already begun to attract concern from privacy advocates. The iRobot deal comes hot on the heels of Amazon’s $3.9bn deal to acquire the direct primary-care company One Medical, operating as 1Life Healthcare Inc, which itself sparked concerns about data privacy.

Though it is unknown if the iRobot transaction will attract significant regulatory scrutiny, if the deal falls through, Amazon would be required to pay iRobot a $94m termination fee.

News: Alexa! Start my Roomba: Amazon buys robot vacuum maker for $1.7 billion