Equicapita Update Canadian Private Debt Market Continues to Evolve and Grow
Summary
Stephen Johnston, a partner at buy-out firm Equicapita reports, "The alternative market in Canada is moving to fill a capital void and allow non-institutional investors to add private equity offerings directly into their investment portfolios.While this market tends to be focused on commercial and residential real estate offerings there are a growing number of more traditional private equity vehicles such as Equicapita raising capital in this universe.Equicapita believes that there are compelling reasons for making private equity investments in the Canadian SME market which is experiencing one the largest generational transfers of wealth as boomer entrepreneurs retire and sell their businesses.However, Equicapita believes it could be poised to become one of the most pressing economic challenges facing the Canadian economy.According to CIBC data it is estimated that “$1.9 trillion in business assets are poised to change hands in five years — the biggest transfer of Canadian business control on record... by 2022, this number will mushroom to at least $3.7 trillion as 550,000 owners exit their businesses.”On the other side of the coin the need for investors such as pensions, family offices to generate higher risk adjusted yield is considerable and challenging in todays interest rate environment.These two forces are helping grow the Canadian private debt market which to a large degree bypasses the traditional commercial and investment banking channels and works with accredited investors via the growing exempt market dealer (“EMD”) segment.Stephen Johnston, a partner at buy-out firm Equicapita reports, "The alternative market in Canada is moving to fill a capital void and allow non-institutional investors to add private equity offerings directly into their investment portfolios.While this market tends to be focused on commercial and residential real estate offerings there are a growing number of more traditional private equity vehicles such as Equicapita raising capital in this universe.