CVCA H1 Quarterly Exclusive: Behind Québec’s Booming Agri‑Forestry Industry
This article is part of a new series, CVCA Quarterly Exclusive, written and published by the Canadian Venture Capital and Private Equity Association. This series provides an analysis of the CVCA’s most recently published VC & PE Canadian Market Overviewthrough expert commentary and perspectives.
Québec is advantaged with a natural environment that is attracting increasing private investment in its agri-forestry sector. It is home to over 32 thousand farms in Canada. According to a 2006report from Statistics Canada, the province has the greatest number of dairy cows in the country, holds 90 per cent of Canada’s maple taps and is home to the most acres in the country allocated to blueberry farming.
Record private investment in the province’s agri-forestry sector were highlighted in the CVCA & Réseau Capital’sH12017 Québec Market Overview with investment in the 6‑month period higher than each of the previous years since 2013. In 2013, the agri-forestry sector in Quebec received $357M invested over nine deals, $558M over 14 deals in 2014, $564M over 23 deals in 2015 and $312M over 37 deals in 2016.
Overall private equity in Québec represented 56% of all Canadian PE deals in Canada in H12017 and 30% of all dollars invested ($4.2B out of $13.9B). There were 12 deals in the agri-forestry sector with a total value of $859M, the largest sector share during this period and more than twice the amount compared to the second place industrial and manufacturing sector; which only capured $319M (49 deals).
The largest agri-forestry deal, the $200M investment in La Coop fédérée with participation from Fondaction CSN, Fonds de solidarité FTQ, and National Bank Financial, placed second in Québec’s list of top PE deals. La coop fédérée is a cooperative of agricultural producers in Québec. The investment will be used to finance acquisition and capital investment projects that are anticipated in La Coop fédérée’s five-year plan.
La Coop fédérée’s CEO, Gaétan Desroches, said the investment is a testament to La Coop’s reputation for success.
“For an enterprise, there is no better mark of confidence than for such reputable investors accepting to support us in our growth plans with an addition of long-term capital. This investment, which comes at a time when we have just experienced our best financial results in the 95 years of our existence, will help us pursue our ambitious expansion program in Québec, elsewhere in Canada, and even internationally.”
Also in the list of the Quebec’s top disclosed PE deals in the first half of 2017 was the $58M investment in Pangea Opérations Agricoles, S.E.C. / Pangea Terres, Agricoles S.E.C. which included participation from Fonds de solidarité FTQ. Pangea is a Québec agricultural operating company proposing a new entrepreneurship model, in partnership with farmers/partners and local communities. Pangea creates joint ventures where agricultural partners retain 100% ownership of their land.
Investing in both of the top agri-forestry deals in H12017, Fonds de solidarité FTQ President, Gaten Morin says we can see more of the same in the future.
“The Fonds de solidarité FTQ identified the agri-food sector as a centre of excellence for the Québec economy and is committed to investing more in this area.”
To read more about private equity activity in the first half of 2017, read the full CVCA H12017 VC & PE Canadian Market Overview here and the Quebec Market Overview here.