Canadian mergers and acquisitions rose about 13 percent to $120.5 billion (US$93.2 billion) in the first half of 2017, driven by big-ticket energy deals and robust cross-border activity, according to Thomson Reuters data released on Thursday.
Despite strong initial public offerings, overall equity capital deals fell 12 percent to $26.9 billion in the first half from a year ago, the data showed.
JPMorgan, Toronto-Dominion Bank and Goldman Sachs took the top three spots in the M&A league tables rankings, while Royal Bank of Canada, TD and Bank of Montreal were the top three advisers on Canadian equity issues in the first half of 2017.
Canadian companies and pension funds have been seeking investment opportunities outside of Canada, and that is expected to keep M&A bankers busy in the second half.
“We see the financial buyers – the pension plans, asset managers – continually active outside of Canada,” said David Rawlings, head of JPMorgan Canada.
The two biggest energy deals of the year so far were Cenovus Energy Inc‘s roughly $16.8 billion acquisition of ConocoPhillips Co‘s oil sands and natural gas assets and Royal Dutch Shell plc‘s sale of most of its Canadian oil sands assets for US$8.5 billion.
“The large international majors are looking to delever their balance sheet and sell non-core assets,” said Peter Buzzi, co-head of Canadian M&A at RBC. “And for many of them, it appears Canada falls into that non-core category,” he added.
Canadian IPOs, which have been rebounding after a quiet 2016, rose to $3.4 billion, the best first half in 11 years.
“The IPO pipeline looks strong,” said Benoit Lauzé, head of equity capital markets at CIBC. “There would be very significant appetite for good technology names,” he added.
Kinder Morgan Canada Ltd‘s $1.75 billion IPO and Canada Goose Holdings Inc‘s $390 million offering were some of the highlights in the first half.
But overall, the equity capital activity in the energy sector could slow because of choppiness in oil prices, bankers said.
“Investors have been generally taking a risk-off approach and we’re seeing limited conviction that oil prices are going to be high in the near term,” said Kirby Gavelin, head of equity capital markets at RBC.
(Reporting by John Tilak; Editing by Denny Thomas and Dan Grebler)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of Reuters/Andrew Burton