Clairvest Group Inc. and Ontario Teachers’ Pension Plan Recognition

The CVCA – Canada’s Venture Capital & Private Equity Association proudly announces that Clairvest Group Inc. (Clairvest) and Ontario Teachers’ Pension Plan (Teachers’) have been awarded the prestigious 2013 ‘Deal of the Year Awards’ in the private equity category. Established in 1998, the CVCA’s awards celebrate the significant investment successes of its members. This year's selection process highlighted those CVCA members who achieved the most remarkable investment returns primarily during the calendar year of 2012, with one award designated for venture capital and another for private equity.

Overview of Clairvest's Investment

Clairvest invested in PEER 1 in August 2009, backing a robust growth strategy that involved extensive investments in data centers, cutting-edge technologies, skilled personnel, marketing, and acquisitions. A noteworthy transaction occurred in December 2012 when PEER 1 entered a binding agreement to be acquired by Cogeco Cable (TSX: CCA) for an equity value of approximately $526 million. Clairvest had initially invested around $25 million in PEER 1's common shares, realizing total proceeds exceeding $81 million upon the acquisition, which translates to an internal rate of return (IRR) of 40%, equating to 3.2 times the original investment.

Industry Overview in Canada

PEER 1 Hosting is recognized as one of the leading IT hosting providers globally, leveraging a high-performance 10Gbps FastFiber Network™ and operating 19 state-of-the-art data centers and 21 points of presence in North America and Europe. The company boasts an impressive customer base of more than 10,000 clients worldwide, underscored by a commitment to a 100% uptime guarantee and around-the-clock support.

The Canadian IT hosting industry has witnessed significant growth, bolstered by modern advancements like cloud computing and increased demand for robust digital infrastructures. With businesses increasingly reliant on digital platforms, providers like PEER 1 are vital in ensuring companies maintain operational excellence while adapting to evolving technological demands.

Furthermore, as data privacy and security concerns become more paramount, leading hosting companies are investing heavily in infrastructural upgrades and technological advancements. This is particularly vital for companies looking to establish trust with their clients while offering state-of-the-art service delivery mechanisms.

Overall, the combination of increasing digital transformation, a robust telecommunications infrastructure, and strong customer service capabilities positions Canada’s IT sector for sustained growth and innovation. This landscape also creates numerous opportunities for private equity investments in promising platforms that address market needs.

Rationale Behind the Deal

The rationale for Clairvest's investment in PEER 1 stemmed from its commitment to supporting a growing and innovative company within the IT hosting sector. Determined to facilitate rapid expansion, Clairvest provided not just capital but also strategic guidance to ensure PEER 1 could capitalize on emerging market opportunities. The successful exit and significant return on investment highlight the foresight and diligence of Clairvest in identifying high-potential investment avenues.

About the Investors

Clairvest Group Inc. has been a key player in the Canadian private equity landscape for over 26 years, managing around $1 billion in equity capital. The firm focuses on investing in profitable small to mid-sized North American companies across diverse industries, emphasizing strategic partnerships to foster company growth and development. Clairvest’s commitment to unlocking value for its stakeholders is clear through its robust investment strategies and execution capabilities.

On the other hand, Ontario Teachers’ Pension Plan, managing $129.5 billion in assets, is one of the largest single-profession pension plans in Canada. The plan invests the pension funds of over 303,000 teachers, highlighting its commitment to long-term growth and value creation. Their long-term association with Maple Leaf Sports and Entertainment (MLSE) illustrates a successful strategy of partnership and investment to yield substantial returns over time.

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The recognition of Clairvest and Teachers’ as ‘Deal of the Year’ award winners speaks volumes about the expertise represented in their respective investments. The conviction that both investment firms displayed towards enhancing the value of their portfolio companies is commendable. These strategic partnerships not only facilitated substantial financial gains but also contributed positively to the overall market landscape.

Analyzing Clairvest's investment in PEER 1, it is evident that their approach to harness growth in a rapidly evolving sector was a sound investment decision. The ability to generate a 40% IRR is a testament to their strategy and supports the argument that well-executed private equity investments can yield impressive returns, reinforcing the role of professional management in achieving such outcomes.

Similarly, Teachers’ long-term engagement with MLSE and subsequent successful exit exemplifies the importance of patience and strategic vision in investment management. Their gains demonstrate how focused efforts in evolving industries can maximize shareholder value and support larger organizational objectives.

Overall, these transactions underscore the significant impact that dedicated private equity investors can have on their investee companies and the broader Canadian economy. The successes of both Clairvest and Teachers’ exemplify how private equity can serve as a catalyst for growth, innovation, and job creation within key industry sectors.

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