Small and medium-sized firms drove BDC’s $4.3B in financing for 2013

MONTREAL—Robust small and medium-sized enterprise (SME) investment activity increased demand for Business Development Bank of Canada (BDC) financing and services.

The crown corporation said its fiscal year ending March 31 2013, BDC’s clients accepted a total of $4.3 billion in loans and subordinate financing. BDC also authorized $145.3 million in venture capital investments and undertook 2,180 consulting mandates.

“The overall strength of the investment climate in Canada has permitted our clients to do well financially, and ultimately this is reflected in our performance,” said Jean-René Halde, BDC’s President and Chief Executive Officer. “As a growing number of entrepreneurs choose BDC as a complement to their financial institution, we continue to serve them in an increasingly efficient and cost effective manner.”

In fiscal 2013, BDC paid a dividend of $68.6 million to its sole shareholder, the Government of Canada, and it will make an additional payment of $59.6 million in dividends on common shares in fiscal 2014.

In 2011, as part of its Digital Economic Strategy, the federal government asked BDC to earmark $200 million to help tackle Canada’s productivity challenge, which can in part be attributed to insufficient investments in technology. During fiscal year 2012, BDC launched its strategy to help entrepreneurs better utilize Information and Communications Technology (ICT). The results surpassed original projections, demonstrating that they have been well received by SMEs. Since implementation of the strategy, BDC has authorized 1,626 loans for a total of $131.9 million.

Key Highlights for 2013:

• 46% uptake in demand for the Machinery and Equipment Loan. This is financing to buy machinery and equipment and finance related expenses such as shipping, installation and training over a 12-month period.

• Collaborative relationships with organizations like the Community Futures Development Corporations, allowed BDC to support more than 1,060 entrepreneurs.

• Financing clients accepted $4.1 billion in new loans through 9,195 transactions.
• Net income totalled $441.5 million, compared to $504.7 million in fiscal 2012. The closing portfolio, before allowance for credit losses, rose to $16.4 billion from $15.3 billion, an increase of $1.1 billion, or 6.9%, over 2012.

• Subordinate Financing clients accepted a total of $189.8 million in financing, involving 113 transactions. Net income totalled $35.1 million; $1.1 million lower than reported in the prior year. The BDC Subordinate Financing portfolio reached $557.8 million, an increase of 22% from the $457.4 million in fiscal 2012.

• Venture Capital had total authorizations of $145.3 million in fiscal 2013. BDC Venture Capital recorded a net loss of $8.1 million, compared to a $42.7 million net loss in the prior year.

• The Consulting practice undertook 2,180 mandates in fiscal 2013. Although there was a modest improvement in consulting revenues, up $1.6 million from the previous year to $24.0 million, the overall net loss was $11.6 million.

• Securitization authorized a total of $265 million in new investments under The Funding Platform for Independent Lenders (F-PIL, formerly known as the Multi Seller Platform for Small Originators (MSPSO), which is designed to expand financing options for small and medium-sized Canadian auto and equipment finance and leasing companies. BDC Securitization recorded a net income of $11.4 million for the year; $34.8 million lower than in the prior year, mainly due to lower net interest income as a result of the decline of the portfolio. As at March 31, 2013, total asset-backed securities stood at $437.5 million compared to $763.2 million in fiscal 2012.