JPMorgan Chase, the lead advisor to General Electric Co on the sale of its finance assets, vaulted to the top of the Canadian M&A league tables following a string of GE asset sales to Canadian buyers.
Thomson Reuters data released on Friday showed US$191 billion in mergers and acquisitions involving Canadian entities year-to-date, up 28 percent from about US$149 billion from a year ago. The overall number of deals fell nearly 10 percent.
Royal Bank of Canada and Morgan Stanley came in second and third, respectively, the data showed.
A key driver was acquisitions of GE assets by Canadian financial buyers like the Canada Pension Plan Investment Board, Element Financial and Bank of Montreal.
The bullish data shrouded the fact that weak commodity prices have muted deal activity in energy and mining.
“In the last quarter, I think it will continue to be active, but in order for it to be really active we’d need a pick-up in energy and mining activity,” said David Rawlings, head of JPMorgan Canada, adding that he is optimistic about deals rebounding in those sectors in 2016, but not in the next three months.
While Canadian M&A activity this year has been driven by domestic firms hunting for deals that will help them grow abroad, M&A activity in the latter part of the year will be predicated on the macro market environment, bankers said.
“Our pipeline remains very strong, but it’s a question of getting deals announced and that depends on financing markets and the conviction of boards and management teams around the future,” said Dougal Macdonald, head of Morgan Stanley Canada.
On top of the weakening Canadian dollar, the recent pullback in the equity markets is also expected to dampen near-term deal activity.
Volatility “is likely to cause people to pause before using their shares as consideration in deals, so I’d expect there to be a slight, and hopefully only temporary, decline over the last quarter,” said Grant Kernaghan, managing director of Canadian investment banking for Citigroup, which placed sixth just behind BMO and Goldman Sachs.
Despite gains, some advisers highlighted the impact market conditions were having on deals.
“The instability in the market over the past quarter has tinged the optimism with a bit of uncertainty,” said Cornell Wright, co-head of M&A at law firm Torys.
Among law firms, Osler Hoskin & Harcourt topped M&A activity, followed by Torys and McCarthy Tetrault.
Thomson Reuters’ Canada Capital Markets Review-First Nine Months 2015 can be viewed here.
(Reporting by Euan Rocha and John Tilak; Editing by Chizu Nomiyama)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of Reuters/Shannon Stapleton