RBC leads rise in Canadian equity issues despite choppy markets

Fri Oct 2, 2015 11:17am EDT
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By John Tilak and Euan Rocha

TORONTO Oct 2 (Reuters) - Royal Bank of Canada led a rise in the value of Canadian equity issues for the first nine months of 2015, overcoming a slowdown in the third quarter due to increased choppiness in equity markets.

Equity financings rose to C$36 billion ($27.23 billion) in the period, compared with C$33.6 million a year ago, according to Thomson Reuters data released on Friday.

BMO Capital Markets was No. 2 in the league table rankings, followed by Bank of Nova Scotia. CIBC World Markets and TD Securities rounded out the top five.

While deal activity is typically weak in the summer months, the usual rebound after Labor Day did not happen as a surge in volatility due to questions about China's economic growth weighed on new issues going to the market.

"Some of the market turbulence we've seen has slowed down deal activity. So issuers need to be a lot more nimble and timing becomes more important," said Derek Neldner, head of Canadian investment banking at RBC Capital Markets.

Going forward, "the theme of M&A-driven financing will be a dominant one," he added.

The biggest deal of the year so far was a C$2.2 billion equity raise by Canadian energy company Emera Inc in the third quarter to help finance its planned acquisition of U.S. electric and gas utility holding company Teco Energy Inc for $6.44 billion. Including the assumption of debt, the M&A deal is valued at $10.4 billion. Advisers for the equity financing included Scotiabank, RBC and JPMorgan Securities Canada.

Market volatility shot up in late August and remains at fairly elevated levels, making it more challenging for investment bankers to price issues.   Continued...