BDC Capital commits $1.8B in growth capital, parallel to $1B CBGF

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By Ted Liu

BDC Capital said it will invest $1.8 billion in growth capital over 5 years to accelerate support for Canadian “asset-light high-growth SMEs to increase their innovation, productivity and globalization rate.”

BDC Capital’s announcement follows the $1 billion Canadian Business Growth Fund (CBGF) to be created by Canada’s leading banks and insurance companies and was announced a month ago on March 9, 2017. The Canadian Business Growth Fund will invest up to $1 billion in Canadian businesses over the next decade to bolster growth and innovation.

Now Canada will have abundant yearly growth capital supply of $460 million over next 5 years.

BDC Capital said the new commitment represents a 50% increase in the bank’s typical lending with respect to growth capital compared to the previous five years, denoting the bank’s continued effort in this asset class.

In additional to mezzanine financing, BDC Capital also finances business transition projects via mergers, acquisitions and management buyins/buyouts.

“We often see that high-impact companies are actively looking for growth capital to finance scale up projects, develop new products, hire and retain employees, and expand to new markets,” said Jérôme Nycz, Executive Vice President at BDC Capital. “In later stages of growth, we have also noticed unmet demand for minority equity tickets. Our high level of expertise and proven capacity to collaborate on deals with financial institutions in Canada, allows BDC to take on more risk and help entrepreneurs secure the growth capital required to pursue rapid growth opportunities.”

“Over the past five years, we deployed close to $1.2 billion dollars in growth capital via more than 750 transactions,” said Patrick Latour, Senior Vice President, Growth and Transition Capital, at BDC Capital. “This initiative is a natural continuation of our efforts to support Canada’s SMEs with their growth and transition projects. The capital will be deployed over five years and includes higher-risk solutions such as cash flow, mezzanine, and equity.”

photo credit: Charii28 via pixabay