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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.
"The (oil and gas) business is going to move from one dominated by growth to one that's going to be much more focused on lowering operating costs."
The industry needs visibility on oil prices for activity to rebound, bankers said.
"In the shorter term, we're going to have significant further volatility in the first quarter of 2015," said Kirby Gavelin, head of equity capital markets, RBC Capital Markets.
No one is holding their breath waiting for oil prices to bounce back to last year's highs.
"We don't need oil prices to spike back up to see equity issuance resume. All we need is stability," BMO's Miller said. "All we need is for investors to know that they're not catching a falling knife for the market to open up again."
Debt issues dropped 6.1 percent to C$166.6 billion in 2014. RBC led the pack, followed by TD Securities and CIBC World Markets.
$1=$1.18 Canadian Reporting by John Tilak and Euan Rocha; Editing by Peter Galloway