March 20, 2007
Federal Budget expands EDC Equity Program to help Canadian companies grow internationally
(OTTAWA) – March 20, 2007 – New regulatory changes outlined in the 2007 federal budget will enhance Export Development Canada’s (EDC) ability to invest in private equity and venture capital funds to help Canadian companies to expand and grow their business internationally, particularly in emerging markets.
“These changes offer greater flexibility for EDC to invest strategically in international partnerships, creating more opportunities for Canadian companies,” said EDC President and CEO Eric Siegel. “We will be able to help more small- and mid-market companies innovate, commercialize their business, and go global as a result.”
As part of its Global Commerce Strategy to ensure that Canadian businesses can fully participate in global market opportunities, Canada’s New Government will introduce new regulatory amendments to remove the existing CAD 10 million limit on specific investments by EDC. The approval of the Minister of International Trade and the Minister of Finance would be required should EDC’s stake in any single venture or fund exceed 25 per cent of aggregate invested capital.
Since 1997, EDC has had a role in helping Canadian companies grow as a direct venture capital investor, and as a limited partner in private funds. EDC’s Equity Program currently has CAD 140 million in investment commitments, and that participation increasingly has been focused on emerging markets. Once the regulatory changes take effect, EDC expects its equity program to grow to CAD 750 million by 2010.
“To really take advantage of growth opportunities abroad, Canadian companies need a wider range of services to increase their export-readiness, acquire the know-how and make the connections they need with new partners,” Mr. Siegel said. “This program is going to help some very promising Canadian companies succeed in many of the world’s hottest markets.”
The EDC Equity Program focuses on two groups of companies: small- and mid-sized companies that want to grow their business by going global, and “next generation” exporters – those technology companies that were born global by virtue of their product, but need to develop to grow. Both groups face gaps in financing, networking and experience. EDC participation as a partner in equity fund structures managed by experienced commercial players helps bridge those gaps.
EDC’s partnerships in its Equity Program connect Canadian companies to international fund managers and their respective investor base, and help companies integrate their activities with those of the funds. Growth of the Equity Program’s activities is expected from a greater focus on advanced and clean technologies via venture capital, high-growth companies by way of middle-market private equity, and the development of emerging market investment strategies.
EDC is Canada’s export credit agency, offering innovative commercial solutions to help Canadian exporters and investors expand their international business. EDC’s knowledge and partnerships are used by 7,000 Canadian companies and their global customers in up to 200 markets worldwide each year. EDC is financially self-sustaining and is a recognized leader in financial reporting, economic analysis and has been named one of Canada’s Top 100 Employers for six consecutive years.
Export Development Canada