Novacap closes new fund at $470 million, targets Toronto

Novacap is closing its new fund at $470 million.

The new fund, called Novacap Industries IV, marks the largest partnership in the firm’s history. It was more than 10 per cent higher than the firm’s original goal of $425 million.

According to PEHub’s Kirk Falconer, the Longueuil-based firm traditionally invests in North American consumer-goods and manufacturing companies, as well as technology, media and telecommunications. Some of its portfolio companies include Stingray, Nautilus Plus, Bentley, fibrenoire and more.

Now it will seek out more Ontario-based companies as investment targets. Three years ago, Novacap opened an office in Toronto, taking a first step towards a more “pan-Canadian” thesis with the acquisition of Toronto-based Hallcon. Hallcon Corp, a Canadian employee-transit-services provider, joined Novacorp’s portfolio last August.

Novacap will also “beef up” investments at its Montréal office.

PEhub wrote that Fund IV got off to a strong start in late 2014, when it raised an initial $300 million.

The close was anchored mostly by re-ups from North American pension funds and other institutional investors. They included Caisse de dépôt et placement du Québec, which has backed every Novacap fund since 1981.

Many new limited partners were family offices and high-net-worth investors. Individual LPs included a few chief executives of past and current portfolio companies. In all, about 40 domestic and international LPs committed to Fund IV.

-Kirk Falconer, PEhub

The firm has been quite active over the past few years, closing Novacap TMT IV, a technology-focused fund, in 2014. Together with the new fund, it has raised $845 million in the past two years, bringing total assets under management to $1.6 billion.

Novacap tends to target acquisitions of companies with annual revenue of between $30 and $300 million. Still, managing partner Jacques Foisy implicated that the heads of these companies weren’t much different than a startup founder, once upon  time.

“For over three decades, Novacap has focused on building companies at home and abroad, and helping them become market leaders,” he said. “Many of these have been small, nimble and highly entrepreneurial Canadian businesses that have successfully grown south.”

The partner referenced Knowlton, Quebec’s Knowlton Development Corp (Les Emballages Knowlton, Inc.), a Quebec maker of personal-care and beauty products that received $165 million from Novacap in 2014. Since then it has gone on to acquire several US-based competitors in ChemAid Laboratories, Kolmar and Cosmetic Technologies.

Novacap was founded by Marc Beauchamp, who currently serves as chairman.


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