Canada slow to the catch in key markets

TORONTO—Canada is cutting fewer deals than its peers in the growing economies of Brazil, Russia, India and China (BRIC), according to a new report by PwC.

Since January 2000, Canadian companies made just 188 acquisitions in the BRIC nations, well below the the US (1,504) and the UK (408). The only country that lagged behind Canada was Australia, which made 106 deals.

Total dollar value of Canadian acquisitions also trailed at just $3.9 billion, compared to the U.S.’s $73 billion and Germany’s $17 billion.

China represented 42 per cent of acquisition activity, though many of these entities were actually Chinese companies on Canadian stock exchanges. Brazil was the second busiest investment destination at 38 per cent. India deals trailed well behind at seven per cent.

Kristian Knibutat, PwC’s Canadian deals leader, says business in Canada would be wise to pick up the pace.

“While recent turmoil in these regions supports this type of cautious approach, in the long term, Canadians will have to increase investments in the BRIC regions to stay competitive,” he says.

It could be that Canada is just a late bloomer.

Knibutat notes that at least in terms of dollar volume growth, Canadian deals have been increasing at a healthy rate with $384 million in acquisitions announced year-to-date as of the end of this May. Meanwhile, most other developed nations are seeing deal values post-crisis remain well below peak.

Overall, Canadian companies have been active in other growing economies. Central and South America were the most heavily targeted regions with Argentina, Chile, Colombia, Peru and Mexico accounting for more than half of the volume.

Knibutat says the strong dollar could continue driving this upward trend.