Strong SME investment activity increases BDC business volumes

MONTREAL, Aug. 27, 2013 /CNW Telbec/ - Robust SME investment activity increased demand for Business Development Bank of Canada (BDC) financing and services. During fiscal 2013 ending March 31st, 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.

"Our long tradition of serving entrepreneurs and contributing to their success is at the heart of BDC's purpose," added Thomas R. Spencer, Acting Chairperson, BDC.

Demand for Information Communications Technology (ICT) products and services exceeds projections

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 for fiscal 2013 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.

"Our work to raise awareness of the importance for today's entrepreneurs to invest in information and communications technology has produced results," explained Mr. Halde. "Our ICT hub on our website received more than 200,000 visits last year, demonstrating a real interest on the part of SMEs in this type of technology."

Key Highlights for Fiscal 2013

• As BDC clients looked to improve their productivity, there was a 46% uptake in demand for the Machinery and Equipment Loan. This specialized financing allows entrepreneurs to buy machinery and equipment and finance related expenses such as shipping, installation and training over a 12-month period.
• We continued to expand our network of partners to better serve our clients. Collaborative relationships with organizations like the Community Futures Development Corporations, allowed BDC to support more than 1,060 entrepreneurs.
• Demand for Financing solutions remained strong. Financing clients accepted $4.1 billion in new loans through 9,195 transactions. Net income totalled $441.5 million in fiscal 2013, 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, with total authorizations of $145.3 million in fiscal 2013, remained a major investor in Canada despite the persistent and ongoing challenges in the investment climate. However, there were some encouraging signs of improvement, enabling BDC to serve more clients and invest in a greater number of large, private sector venture capital funds. 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 to provide entrepreneurs with the affordable advice they need to grow their business and enhance their competitiveness. 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.

Read BDC's annual report

About BDC
Canada's business development bank, BDC, puts entrepreneurs first. With almost 2,000 employees and more than 100 business centres across the country, BDC offers financing, subordinate financing, venture capital, securitization and consulting services to more than 28,000 small and medium-sized companies. Their success is vital to Canada's economic prosperity. Visit www.bdc.ca for more information.

SOURCE: Business Development Bank of Canada