Novacap strikes C$260m first close for debut financial services fund

Canadian private equity house Novacap has hit a C$260m first close for its debut fund focused on financial services investment – just a couple of week after raising C$940m for its latest ‘industries’ vehicle.

The firm said it plans to raise up to C$500m for Novacap Financial Services I, with a second group of institutional investors expected to close in the first quarter of 2020.

Novacap Financial Services I will target mid-market companies established in North America, especially Canada, with strong growth potential.

Particular areas of interest include specialty insurance and distribution, asset and wealth management, alternative lending and financial infrastructure.

Novacap president and CEO Pascal Tremblay said, ”It is a historical event as we are the first private equity firm in Canada to launch a fund dedicated to financial services businesses.

“The Financial Services fund addresses a significant need in the Canadian market that we have observed over the past few years.  I am very proud of the team that we have assembled, who made this possible.”

Novacap is an active investor in the FinTech space. The firm recently participated in the $270m funding round of payments company Nuvei, helping to increase the FinTech’s valuation to $2bn.

Earlier in the year, the firm made its largest buyout to date, with a $889m deal for buyout of payments firm Safecharge which it has made a bolt-on to Nuvei.

Novacap Financial Services managing partner Marcel Larochelle added, “We are extremely pleased with the strong support received from our investors for this first close.

“This is very timely, as we are currently pursuing some very attractive investment opportunities for the fund.”

The fundraise comes two weeks after Novacap surged past its target for its Industries V fund by nearly 45 per cent, having initially hoped to collect up to C$650m.

Novacap Industries V will be used to invest in companies with strong growth potential in the industrial and manufacturing sectors, as well as in service and distribution.

The firm closed its fourth industries fund on C$470m in 2016, and followed that with the C$840m final close of its fifth tech-focused buyout fund a year later.

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