TORONTO/NEW YORK (Reuters) - General Electric Co’s (GE.N) sale of its finance assets is set to shape and potentially shake-up Canadian M&A league tables this quarter as bankers scramble to get deals across the finish line before the end of June.
In April, GE unveiled a plan to sell about $200 billion in GE Capital assets as it moves away from finance and focuses on manufacturing of industrial equipment. GE Chief Executive Officer Jeff Immelt sped up GE’s sales timeline last month, including the expectation for $20 billion to $30 billion in finance deals by the end of June.
Bankers familiar with the GE sale process say that with many Canadian firms scouting other portions of the GE portfolio, that sale process is potentially likely to shape Canadian M&A league tables not only in the quarter, but for the rest of the year.
Three sources familiar with the matter say bankers are scrambling to get the sale of GE’s vehicle fleet-management business inked before the end of June. GE has said the business includes $9 billion in assets.
Canada’s Element Financial Corp (EFN.TO) is close to buying a big chunk the business, with a smaller portion being taken by another party.
The deal would generate large advisory fees and push Bank of Montreal (BMO.TO), Barclays Plc (BARC.L) and boutique firm INFOR Financial Inc, who are advising Element, up in the Canadian M&A league tables. JPMorgan Chase & Co (JPM.N), GE’s main advisor on the entire sale process, will also see its position elevated.
Element, which also executed a significant equity raise, has been scouting for acquisitions in the U.S. market.
GE’s private-equity lending portfolio was bought by the Canada Pension Plan Investment Board earlier in June for $12 billion.
JPMorgan and Citigroup advised GE on that transaction, while Credit Suisse and Morgan Stanley acted as CPPIB’s advisors.
While the bulge bracket firms have dominated cross-border deal activity during the quarter, a couple of large energy deals are potentially set to boost the position of Canadian banks.
Royal Bank of Canada (RY.TO) and BMO advised the two parties in the long-anticipated Enbridge drop-down deal that was inked this week.
Canada’s largest oil pipeline company Enbridge Inc (ENB.TO) has agreed to transfer some of its Canadian pipeline and renewable energy assets to the Enbridge Income Fund Holdings Inc (ENF.TO). Including debt the transaction is worth C$30.4 billion ($24.64 billion).
Sources close to the matter told Reuters that Cenovus Energy Inc (CVE.TO) is moving closer toward selling its oil and gas royalty lands to the Ontario Teachers’ Pension Plan in a deal that could fetch C$2.5 billion to C$3 billion. TD is advising Cenovus on that process.
Additional reporting by Mike Stone in New York; Editing by Diane Craft and Lisa Shumaker