Another year of uncertainty in the global markets underscored the importance of a disciplined approach to new investments and asset management. Valuations remained more elevated than expected despite high rates and a volatile macro environment. This is likely attributable to the fact that the vast majority of assets brought to market were higher performing and recession resilient, and debt markets strengthened in H2. M&A volumes hit some of the lowest levels in recent memory. In many ways, 2023 was a continuation of the conditions we saw in 2022. Our structure sets us up to navigate these periods of uncertainty because we aren’t driven by typical fund cycles; we can be patient and transact at times that make the most sense for all of our stakeholders. Reflecting this, at the start of the year, we reported our 2022 results which highlighted strong operational and exit performance – you can read more here.
Despite 2023’s slow start, our team completed 3 new acquisitions, including our most recent acquisition of Knight Commercial, a leading provider of commercial restoration services responding to a critical market need as extreme weather events continue to increase. Across the portfolio we had 85 tuck-in acquisitions (year to date) and outside of M&A, there was plenty of optimism as we continued to strengthen the portfolio with operational improvements, strategic hires, and progress on sustainability goals. You can read more about this activity here.
Over the last year, we welcomed just over 10 new team members at all levels across our firm and made some significant changes to our team structure by formally bringing our Capital Solutions and Growth Equity teams together, under the PE strategy - so we can better leverage the strength of our team and the insights from across our ecosystem. It has always been a differentiator to be able to apply the learnings from the disruptive investments in our ventures portfolio to growth and buyouts and our operationally minded approach to asset management in our buyout strategy to our venture and growth portfolio. In April, Michael Block was named Head of Capital Solutions & Growth Equity and in August, Michael Yang was named Head of Ventures following Damien Steel’s departure to head up Deep Sky – an OMERS-backed climate tech company. Both Michaels bring a renewed energy to their respective roles and I’m looking forward to what’s to come for both our Growth and Ventures businesses in 2024.
Throughout the year our team demonstrated a strong commitment to the communities where we live and work by partnering with local charities through our Community Days initiative – a vehicle for employees to support local communities through volunteering and giving. More recently, our Ventures team was able to raise close to $15,000 for a Toronto charity via their annual Players Tournament poker night. I also wanted to recognize Lane McDonald for her work, not only in driving value creation across our investments, but for her role as a broader industry leader. A co-founder of Senior Women in Private Equity (SWIPE), she and her organization were highlighted in The Wall Street Journal Pro Private Equity for their role in supporting women building private equity careers. This type of work is often infectious and can help kickstart similar grassroots groups. Earlier this year, our very own Jenn Zhou co-founded the Women’s Peer Nexus @ OMERS, a support network for women in investing across OMERS. You can read more about this initiative here.
Looking ahead, we expect 2024 to be a stronger year for M&A broadly. As the market has adjusted to the idea of interest rates remaining high, we expect the bid-ask spread to continue to tighten and for a moderate uptick in activity in the second half of the year.
Thank you for your continued partnership – we look forward to working together in the year ahead and wish you a wonderful holiday season and a happy new year!
Mike Graham, Global Head of Private Equity
