What is private equity?
Private equity investments are negotiated directly with issuing companies. They are long-term investments made to support specific projects. The Caisse is a leading Canadian private equity investor, known for the expertise it has developed over the past thirty years. Its reputation inspires companies to solicit it directly, although the reverse often occurs as well. The investment process meets stringent criteria, is based on a relationship of trust, and targets a single objective: promoting the company’s growth through financial support and the contributions of an extensive business network and specialists familiar with the specific sector of activity. This is the value added provided by the Caisse.
Investing in private equity: the example of BSA
On November 18, 2010, the Caisse announced a $7.8 million equity investment in Investissements BSA Inc. (BSA), a Montreal-based food service and processing company. This investment will support BSA’s Canadian and international expansion projects.
A leader in Québec’s food industry
A leader in providing technical services to the food and meat processing industry in Québec, Ontario, and the Maritimes, BSA is a dominant player in its market with good prospects. The company was founded in 1989 and now has 135 employees, including 120 in Québec. Its activities are split into four divisions, one of which is in India. The company’s leadership has a clear vision and the ability to seize growth opportunities.
An investment process explained
From choosing a sector to the initial approach
An investment usually begins with the choice of a sector of activity offering promising growth prospects, such as the food industry. The next step is to identify the outstanding companies in that sector. That’s why Claude Lafond, senior director, investments, medium-sized businesses, met with BSA a few years ago. His goal: to present the Caisse’s offer and its benefits, so the company would consider the Caisse when seeking an investor to support its growth.
Determining the company’s fair value
At the core of any private equity investment is a project developed by the company. The Caisse team must review this project and, if it seems promising, carry out an in-depth study of the company and its market. This rigorous process, which may take several weeks, involves evaluating various parameters to determine the value of the company’s shares. The Caisse and the entrepreneur then agree on the fair value of the company and choose the appropriate investment vehicle (shares, loans, bonds).
Finalizing the transaction
The Caisse then proceeds to draw up the necessary documents – the share purchase agreement and the shareholders’ agreement. The signing of these documents marks the conclusion of the transaction.
Within the framework of its equity investments, the Caisse aims to help entrepreneurs strengthen their governance structures, offering its collaboration in the establishment of boards of directors and the recruitment of experienced board members. The choice of the Caisse’s representative on the board of directors is made jointly with the company head. The goal is to ensure that board members have the necessary expertise to promote the company’s growth and development over the years.
Placing its expertise at the service of the company
Once the transaction is finalized, the Caisse stays in regular contact with the company and is often consulted on important decisions. It also puts its network to work and attempts to forge ties between complementary companies in its portfolio and business contacts in Canada and overseas. In the case of BSA, its network and expertise will be useful in supporting the company in its marketing projects in Canada and accelerating its international expansion.