Scotiabank tops in Canada equity issues in 2014 as big deals dominate

Thu Jan 8, 2015 7:00am EST
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By John Tilak and Euan Rocha

TORONTO Jan 8 (Reuters) - Bank of Nova Scotia led investment banks in Canada in the value of equity issues it advised on in 2014, driven by a few high-profile initial public offerings and some big oil and gas deals before the oil-price rout in the year's second half.

Equity issues worth C$37.3 billion ($31.6 billion) were done in Canada last year, up from C$34.1 billion in 2013, data from Thomson Reuters showed on Thursday. Scotiabank advised on C$5.5 billion, followed by RBC Capital Markets with C$5.4 billion and BMO Capital Markets with C$4.7 billion.

Strength in oil and gas in the first half of the year overcame sluggishness in the mining and real estate sectors. Robust merger and acquisition activity also helped as companies financed deals by issuing equity.

Multibillion-dollar deals included Baytex Energy's C$1.5 billion bought deal to help finance its Aurora Oil & Gas acquisition, and Turquoise Hill Resources Ltd's C$2.6 billion offering.

PrairieSky Royalty, spun off from natural gas producer Encana, was involved in two of them. Its IPO was one of the biggest ever in Canada, and Encana later sold a stake in PrairieSky for C$2.6 billion.

"It was a year of very large transactions," said Peter Miller, head of Canadian equity markets at BMO Capital Markets. "We're seeing acquirers making large dilutive equity offerings concurrent with the announcement of the acquisition."

Energy IPOs dropped as oil prices retreated, and bankers don't see an immediate pickup.

"I'd be very cautious on IPO activity," said Adam Waterous, co-head of global equity and advisory, Scotiabank.   Continued...