CVCA study targets foreign investors

Canada’s Venture Capital and Private Equity Association have released a major study aimed at attracting more foreign investment into Canadian venture capital and private equity funds.

Canada’s private equity, venture capital market is considered young, especially when compared to the U.S. In past years, its performance has been compared to Eurpoean countries. While the Canadian market offers significant investment opportunities, it is considered an underserved asset with penetration levels only ranking on par with India. In 2009, Canada stood at 0.30% of GDP, while the U.S. and U.K. sit well above 0.50%.

“Our venture capital and private equity industry wants and needs more foreign investment”, said Gregory Smith, CVCA President and Managing Partner of Brookfield Financial, “We are sending a signal to international investors about allocating capital resources to this dynamic and innovative part of the Canadian financial system. That signal is really a green light. Our members welcome the added presence of international L.P.’s with open arms.”

The federal and provincial governments are fully supporting the growth of the market and understand the needs and importance of the industry. Along with supporting innovation and commercialization potential, the federal government overhauled Section 116 of the tax code in 2009. This allowed for a substantial decrease in reporting regulations for foreign investors and boosted the attractiveness of investing in Canada.

The new CVCA study, released to aid in further boosting investment, points out the many attractive features of Canada’s venture capital and private equity industry. These include a strong record of backing winners and a sophisticated infrastructure, along with multi-domain expertise and the opportunity for long-term growth.

It highlights the up and coming vibrant Canadian economy, which has outperformed the rest of the G7 with a 1.7% growth rate over the last decade. Canada is listed as one of the top places to do business in the next five years and the report highlights the opportunities, the workforce, the buyout sector and the industry as a whole.

“This study constitutes a step forward in the CVCA’s program to attract more capital from international sources including sovereign wealth funds into the venture capital and private equity industry,” continues Gregory Smith, “Our next objective is to reach out proactively to those pools of foreign capital and introduce investors to our industry.”

The full study is available on the CVCA website.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.