CVCA Member Profiles

Novacap Achieves Oversubscription For Latest TMT Fund, Eyes Future With Infrastructure Strategy

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On July 20th, Quebec-based Novacap Management announced the closing of its latest technology, media and telecommunications private equity fund, Novacap TMT V. Not only did Novacap successfully close the fund, the firm surpassed the target size of the fund by 40 per cent; motivated by demand from new and existing investors.

Pascal Tremblay, President and Managing Partner at Novacap, reveals a couple of reasons the firm was able to achieve the oversubscription.

The first reason is that we have invested the equivalent of over five hundred million dollars on the TMT side in the last three years alone once you include co-investment from our limited partners,” explains Tremblay. We were able to show the limited partners that it’s not an overachievement to invest such a fund for the next three to four years. The second reason, similar to the first, is you need a good track record. I think our track record shows that we were able to provide good returns to our limited partners (the previous funds’ returns are over 25 per cent). Finally, I think we have demonstrated that we have a very solid team that is absolutely talented with complimentary skill-sets to be able to achieve investment of such a fund.”

Novacap, operating in its 36th year, isn’t immune to precarious market conditions. They too have had to endure over some tricky times; including in 2008. It’s this tenacious attribute that’s helped to build up Novacap’s track record.

In 2008 at the very height of the market, we didn’t do one investment in that year. Not one — even though we had two fresh new funds. We had a range at that point of 580 million dollars from the industry and the TMT Fund, and in 2008 we didn’t do one new investment. Why? Because we couldn’t bear the valuations that were in the market at that point,” Tremblay noted. The thing is, you have to keep that consistency and discipline. I think that’s the best thing and best characteristic that LPs like in us. We’re very, very consistent.”

Weathering the markets isn’t the only thing that’s strengthened Novacap’s reputation. The firm contributes notably to the investment ecosystem in Canada.

If you look across our fund, it’s tens of people in the marketplace now creating businesses. We’ve made well north of 20-to-25 new multi-millionaires in the entrepreneurial side that are now in the markets creating new businesses and building new things,” Tremblay points out. These new businesses are creating new jobs. All of our investment theses are based on growth.”

Tremblay says the firm’s strategy will continue but also reveals Novacap’s plan to evolve with activity in the infrastructure sector.

We are currently looking at adding an infrastructure strategy to our platform because Novacap has become a broad enough platform,” Tremblay says. When you look at all the other services asset managers in North America and what they’ve done over the past 10, 15 years, Canada has somewhat been behind. We’re trying to build a similar type of alternative asset management that has been built all across North America in the last 10-to-20 years. That’s where we’re aiming at for sure.”

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