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| Canada Wire |
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| August 30, 2021 |
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| CPP Investments backs $335m ArcTern Ventures III, BlackRock to invest $500m in Recurrent Energy, legal AI startup Spellbook nabs $20m Series A |
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Happy Monday!
New format: Beginning Monday, February 5, PE Hub's Canada Wire weekly newsletter will have a new streamlined format that focuses solely on private equity deals and dealmakers involving Canadian investors and target companies. Watch for it!
ArcTern Ventures III’s close: ArcTern Ventures, a Canadian venture capital firm investing in climate change and sustainability technology opportunities, this week announced raising US$335 million ($450 million) in the final close of its third fund. The vehicle surpassed an original target of US$300 million.
In a statement, ArcTern identified several of Fund III's institutional LPs, among them TD Bank Group, Allianz, Church Pension Group, OPTrust and Credit Suisse Asset Management.
Another is Canada Pension Plan Investment Board. This country's largest pension system made a commitment of US$25 million to ArcTern Ventures III, New Private Markets' Snehal Shah and Venture Capital Journal's Lawrence Aragon wrote in a story this week.
For CPP Investments, investing in venture-stage technologies “that will assist the energy evolution” are part of a plan to meet its net-zero 2050 target, then chief sustainability officer Deborah Orida told New Private Markets two years ago.
“For our whole portfolio by 2050, we think the economy can reduce carbon emissions significantly with the advancement of technology, including carbon capture and sequestration, and regulations, carbon markets and reporting,” Orida said. Supporting these technologies to scale, therefore, would help put the economy, including CPP Investments’ own assets, in a position to reach net zero by 2050, she added.
CPP Investments' commitment to ArcTern Ventures III reflects a growing institutional appetite for climate-focused funds, even in today’s slow capital-raising market. Between January 2021 and September 2023, 207 new venture capital, corporate venture capital, growth, infrastructure and private equity funds raised US$121 billion in climate-focused assets, Shah and Aragon wrote, citing a report by research firm CTVC.
Founded in 2012 by managing partners Murray McCaig and Tom Rand, ArcTern deploys its capital in ways that help maximize the abatement of greenhouse gas emissions. Fund III will invest in early-stage technology companies that develop and innovate solutions in renewable energy, clean mobility, circular economy, sustainable food and agriculture and industrial decarbonization.
“We are investing...in mission-driven founders who understand that if you’re not rapidly scaling revenue, you’re not having climate impact, and the world needs scaleable decarbonization solutions today, not decades into the future,” McCaig said in ArcTern's statement.
The firm, which has its headquarters in Toronto and additional offices in Oslo and San Francisco, has over time expanded the geographic scope of its investing. A current emphasis on North American and European markets is reflected in recent investments, among them UK-based Winnow, an artificial intelligence-enabled food waste reduction solutions provider, and US-based Liminal, a battery manufacturing intelligence platform.
ArcTern’s Canadian investments include Clir Renewables, a Vancouver-based platform that helps optimize project returns from renewable energy assets, and Hydrostor, a Toronto-based provider of long-duration energy storage solutions. As it happens, CPP Investments also backs these companies. Subscribers can read Venture Capital Journal’s story here.
Canadian VC deal of the week: That would be Spellbook, a Toronto and St. John’s, Newfoundland and Labrador-based artificial intelligence co-pilot for the legal industry. The company this week announced raising US$20 million ($27 million) in Series A financing, bringing its total funding so far to more than US$30 million.
North of 1,700 law firms and legal team customers use Spellbook to support their lawyers with the resources to make more accurate and efficient decisions when drafting contracts and supporting documents, the company reports. With the proceeds of the Series A, Spellbook plans to quickly increase that number to 30,000 law firms worldwide.
The round was led by Inovia Capital, a Canadian full-stake venture capital firm. Other investors included Thomson Reuters Ventures, The Legaltech Fund, Bling Capital, Moxxie Ventures, Concrete Ventures, Path Ventures, N49P and Good News Ventures. See Venture Capital Journal’s news brief here.
Canadian PE deal of the week: Canadian Solar, a well-known solar technology and renewable energy company based in Guelph, Ontario, this week announced that its affiliate, Recurrent Energy, had secured a major investment.
BlackRock's climate infrastructure arm agreed to invest US$500 million ($672 million) of preferred equity, convertible into common equity, in Recurrent. The investment will represent 20% of the outstanding shares of Recurrent on an as-converted basis. Canadian Solar will continue to own the remaining majority shares after the closing of the deal.
Recurrent is a utility-scale solar and energy storage project development, ownership and operations platform. The investment will provide the business with capital to grow its project development pipeline and execute its transition from a pure developer to a developer plus long-term owner and operator in select markets, such as the US and Europe. Check out PE Hub’s news brief here.
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| Top Scoops |
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GP-led deal surge: GP-led secondaries deals, like continuation funds, surged through the second half of last year, reaching near-record volume, and are poised to take up more market share in 2024, Buyouts' Chris Witkowsky wrote this week, citing fresh research from Jefferies.
As GP-led activity picked up momentum in the latter half of the year, LP portfolio sale volume kept up pace, helping to drive overall secondaries deal activity to around US$112 billion, up 4% from 2022, Jefferies said. This is in line with Evercore’s recent estimate of total secondaries activity levels at around US$114 billion, Witkowsky wrote.
GP-led activity reached about US$52 billion last year, with “strong momentum gained in H2 2023…driven by record secondary investor fundraising and new buy-side entrants,” according to Jefferies. The total represented about 46% of all activity.
Driving activity was strengthening pricing, which was helped along by a stabilization in interest rates last year, along with an overall improvement in economic outlook.
The second-half results for GP-led deals, estimated at US$34 billion, represented an 88% increase from the first half (US$18 billion) and the highest half-year level since the second half of 2021, Jefferies said. GP-led activity was broken down between around US$46 billion in asset sales, like continuation funds and tender offers, and US$6 billion from structured equity and fund finance.
“Various factors drove momentum around GP-led deals, including the slower exit environment and LPs’ need for liquidity, along with robust fundraising by existing investors and the entrance of new players, as well as a “growing universe” of syndicate investors, Jefferies said. Fundraising totals came in at about US$255 billion last year. Subscribers can read Buyouts’ story here.
That’s it. Have a great day! Please get in touch with me with your feedback, story ideas, tips, etc., at kfalconer@buyoutsinsider.com or find me on LinkedIn .
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| Bitcoin infrastructure company Blockstream snags $210m |
| Victoria, British Columbia-based bitcoin infrastructure company Blockstream is with its latest financing joining a slew of Canadian technology enterprises that have reached billion-dollar valuations during the pandemic, the Globe and Mail reported. More... |
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