Walter Capital Wades Into Canada’s PE Market

The new firm is a branch of the well-established Walter Group of Companies, launched with the intention of filling a hole left by the country’s aging entrepreneurs who are looking to exit their business.

The number of aging entrepreneurs in Canada presents both a problem and an opportunity. According to data from Statistics Canada, as of July 2015 the country’s population included more people age 65 and older than under the age of 15. That means that those who started businesses are ready to retire but there are few options for a sale. That’s the problem, and newly formed Walter Capital Partners hopes to take part in the opportunity.

Montreal-based Walter Capital—a hybrid of a corporate venture and family office—is targeting baby boomers’ progressive or complete exit from the businesses they have built if they don’t have a clear exit in front of them. The focus will be small-to-medium-sized businesses in Canada, says managing partner Eric Phaneuf, who adds that the firm is in “the hands-on style.”

Walter Capital was launched with $100M of capital from the Walter Group of Companies—established in 1952 by Walter J. Somers—that includes companies such as Walter Surface Technologies. Walter Financial is also part of the group.

A key reason for launching Walter Capital has to do with the number of aging entrepreneurs in Canada whose businesses have potential for further growth. Phaneuf says that most of these entrepreneurs don’t have a clear plan of how to manage the exit and would like to retire or sell their business in order to take care of themselves for the future. “That’s a good place to play and fill the gap that we see.”

Phaneuf and his partner in Walter Capital, Pierre Fitzgibbon, are business executives who grew businesses in Canada and internationally, and he notes that Walter Group is still run by entrepreneurs. “We really understand the challenges of a small-to-medium enterprise in Canada,” he says. Since the firm doesn’t have outside investors, it also doesn’t have to invest and make decisions in order for a company to be sold in four years. “We have the luxury to be more patient. We’re going to invest and make the right decision for the business.”

Other than steering clear of startup companies—if the model isn’t well-proven, they won’t be a partner, Phaneuf says—Walter Capital is industry-agnostic. Sectors in its comfort zone include food processing and food supplements, packaging, consumer goods, and health and wellness. The Walter Group is also a top player in the metalworking industry, and he says that space is also a possibility for investments.