BDC handed out $7.2 billion in loans in the 2019 fiscal year and is making a record dividend payment to the Government of Canada, according to its annual report.
On Tuesday, BDC released its report for the 2019 fiscal year, noting that it had supported 60,000 entrepreneurs and businesses, an increase of seven percent from the previous year. The $7.2 billion in loans, along with the Crown organization’s various initiatives, helped BDC reach a consolidated net income of $885.6 million. BDC stated that this was significantly better than its corporate plan objective of $554 million, though it should be noted that last year BDC hit a record $818.3 million in net income.
With those results, BDC noted that it is able to make a dividend payment of $128.4 million to the Government of Canada, which is its sole shareholder. This is compared to the 2018 fiscal year when BDC paid a dividend of $69.7 million calling it at the time a record for the firm.
Of the overall net income of $885.6 million, BDC Capital, which includes direct investments in its own funds (Information Technology, Healthcare, Industrial, Clean and Energy Technology, Women in Technology, and Co-Investments) as well as indirect investments, brought in $194.2 million. The Crown corporation’s Venture Capital Initiative Programs brought in $53.1 million net income.
The report noted that BDC Capital evolved its investment strategy this year, stating that it took steps to invest more in later-stage businesses. It pointed to its recent $250 million investment, which created the Industrial Innovation Venture Fund, the co-creation of a new IT fund, as well as the $153 million invested in BDC’s Cleantech Practice initiative as key parts of that later-stage funding shift.
Overall, in the 2019 fiscal year, BDC committed $2.1 billion in venture capital. The firm noted that through its own funds it has supported “the development” of 141 companies. Through indirect investment into other firms, BDC stated that it has supported 705 tech firms through investments in 76 funds. BDC stated that its portfolio is comprised of $906.8 million in direct investments and $659.4 million in indirect investments to the 76 funds.
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In the fourth quarter of the 2019 fiscal year, BDC Capital also took part in the co-creation of two private funds including Framework Venture Partners, which launched with $50 million from BDC and a $100 million fund overall, as well as Montreal-based Amplitude Ventures.
Also new in BDC’s 2019 fiscal year, as the firm bringing the Venture Capital Action Plan (VCAP) and the Venture Capital Catalyst Initiative (VCCI) under one business segment, the Venture Capital Incentive Programs (VCIP). In the report, BDC noted that VCAP, (which is being replaced by VCCI), is set to leverage over $904 million in private sector capital and $112.5 million from provincial governments, bringing total venture capital raised to $1.4 billion. VCCI, which recently launched a new cleantech stream, is expected to leverage more than $1.1 billion in private capital and $57.1 million from provincial governments, bringing its total venture capital raised to $1.6 billion.
Predictions for 2020
In its outlook for 2020, BDC pointed to a number of global factors that it sees affecting the Canadian investment economy, including US interest rate hikes, high Canadian interest rates, China and US trade tensions, as well as low oil prices.
“World economic growth has slowed down as global financial conditions tightened relative to last year,” the report stated. “The continuing uncertainty in the relationship between the world’s two largest economies [China and US] will weigh on global growth this year.”
In its outlook for its venture capital investments in 2020, BDC estimated it will authorize $250 million in investments and venture capital programs will see $5 million through VCAP and $44 million through VCCI. BDC also anticipates deploying $600 million in debt and equity transactions for cleantech by fiscal year 2022, noting that to implement the program, BDC also expects capital injections totalling $600 million by 2021.