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Novacap closes two funds totaling C$565

The Montreal-based private equity and venture capital firm says its closure of two sector-specific funds is Quebec’s largest private equity initiative to date.

Canadian middle market firm Novacap has closed a C$156 million ($156 million; €107 million) technology fund as well as a C$400 million industrial fund.

The two funds represent Quebec’s largest private equity initiative to date, Novacap said. The fresh capital will add to Canada’s booming buyout market, which last year reached historic levels due to the pending $46.8 billion buyout of BCE, and also help assuage a trend the head of the country’s venture capital association called concerning: the fact that much of the country’s buyout market is fueled by US rather than Canadian investors.

For the Montreal-based firm, the two fund closes mark a slight departure from its previous strategy, in that its prior vehicles invested in both tech and industrial companies. Novacap’s prior buyout funds closed in 2000 on C$210 million, and on C$73 million in 1981. From its 1981 founding to 1999, Novacap backed 31 companies and did 50-some add-on acquisitions with its first evergreen fund, Novacap Investments.

Novacap Industries III will acquire majority interests in industrial or consumer product manufacturers and service companies with revenues ranging from C$40 million to C$300 million, while Novacap Technologies III will acquire major interests in information technology and communication companies with revenues of $10 million to $200 million.

The funds’ limited partners are from the US, Canada and Europe and include Kensington Capital Partners, Credit Agricole Private Equity, Sun Life Financial, Oak Hill Capital Partners, Rho Fund Investors and Manulife Financial.

Normand Provost, senior vice president of private equity at Caisse de dépôt et placement du Québec, noted that the Montreal-based public pension has supported the firm since 1981.

“We are therefore proud to partner once again with Novacap, for a total investment of $110 million in these two sectoral funds,” he said in a statement. “These funds are totally consistent with our Quebec business partnership and development strategy since the majority of Novacap’s investments to date have been in Quebec businesses. This business relationship has been positive for the companies funded by Novacap, the Caisse and its depositors.”