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BDC's VC arm posts $218M net income on $401.5M portfolio gain
BDC Capital swung to C$218M net income as paper gains from AI and quantum holdings offset a net revenue drop and higher write-offs.
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Canada's largest venture capital investor swung to a profit in fiscal 2026 as paper gains in its portfolio swamped operating losses.
BDC Capital, the VC arm of the Business Development Bank of Canada, reported net income of C$217.8 million for the year ended March 31, according to the Crown corporation's annual report released Wednesday. The result reversed a C$57.6 million net loss the prior year.
The swing came from a C$401.5 million jump in unrealized appreciation of investments -- the paper gains on portfolio companies before they are sold. That more than offset C$70.9 million in net revenue losses and nearly C$50 million in foreign exchange losses. BDC's VC portfolio fair value rose to C$3.68 billion from C$3.2 billion a year earlier.
Direct equity investments drove the appreciation, particularly "valuation step-ups" in segments like AI and quantum computing, the report said. Toronto-based quantum startup Xanadu went public via a SPAC deal at the end of March, valuing the company at a projected US$3.6 billion market cap.
Net revenue dropped because BDC wrote off more investments this year, compared with net realized gains of C$7.1 million last year.