Investment by private equity buyout firms into Canadian companies continued to accelerate during the first quarter of 2007, setting a record pace of new deals and total capital deployed, according to the industry’s quarterly statistical report released today by the CVCA and research partner Thomson Financial.

A total of $5.1 billion was invested in 36 disclosed buyout transactions during the quarter, compared to a total of $11.3 billion invested in 92 deals during all of 2006 – a record year – and already exceeding the $4.5 billion total recorded in 58 deals during all of 2005.

“The growth in global buyout markets is being driven by strong financial returns across the sector,” said Rick Nathan, president of the CVCA and managing director of Kensington Capital Partners, in a news release. “Investors are recognizing the clear benefits available from the private capital markets, and driving transaction volumes to new levels.”

The significant growth in the Canadian market echoes the growth in Europe and other global markets, which are all trailing the dramatic growth seen in the U.S., which saw over $120 billion in buyout transactions during the first quarter. U.S. growth is also spilling over into Canada, as the total investments into Canadian companies were split roughly equally between U.S. and Canadian based investors.

Canadian investors are also increasingly active in foreign markets. Total worldwide investment by Canadian buyout firms equaled the $5.1 billion mark for Canadian target companies, as the foreign buyout capital coming into Canadian targets was essentially matched by the investments made by Canadians abroad. These activity levels are also accelerating, as the quarterly total compares to the $14.3 billion invested by Canadians worldwide during all of 2006 and nearly equals the $5.4 billion total for the full year 2005.

Fund-raising by Canadian private equity firms was off to a relatively slow start compared to the record levels of 2006, when several large Canadian firms came to the market for fresh capital. The total of $765 million raised during the quarter ($261 million in buyout, $37 in mezzanine, $467 in venture) was consistent with 2005 and prior year levels, but well off the pace of 2006 when over $10 billion was raised across the full Canadian private equity market.

“Most private equity firms do not raise new investment capital every year,” noted Mr. Nathan, “but instead commit their funds into new opportunities over a 3 to 4 year period. We therefore should not expect the same levels of new capital coming into Canadian buyout funds this year as we saw last year, when many of Canada’s largest buyout firms raised new funds that have not yet been invested.”