TORONTO (Reuters) - Royal Bank of Canada (RY.TO) and Bank of Montreal (BMO.TO) were the top two advisers on Canadian M&A deals in the first half of 2015, a period during which the overall dollar value of deals surged despite a decline in the actual number of transactions.
Thomson Reuters data released on Thursday showed $122 billion in merger and acquisition deals in Canada in the first half, up 35 percent from the year-before period and topped only by the record first half of 2007. The number of deals dropped 13 percent, however.
"We've got empirical data supporting the fact that investors are currently rewarding companies that are going out and doing big deals," said Grant Kernaghan, Citigroup's managing director of Canadian investment banking.
RBC and BMO snagged the No. 1 and No. 2 rankings by value, respectively, largely on the back of a single large intercompany deal: Enbridge's (ENB.TO) transfer of some of its Canadian pipeline and renewable energy assets to Enbridge Income Fund (ENF.TO). Including debt, that deal was worth $24.2 billion.
Major global investment banks, which advised on the bulk of large cross-border deals, dominated the rest of the league tables. JPMorgan (JPM.N), Citigroup (C.N), Barclays (BARC.L), Deutsche Bank (DBKGn.DE), Credit Suisse CSGN.VX, Morgan Stanley (MS.N) and Bank of America (BAC.N) all ranked high after advising on various sides of the GE Capital asset sales process as well as on Hudson's Bay Co's (HBC.TO) acquisition of German department store chain Kaufhof and other deals.
"The overarching theme we see is that the level of cross-border M&A activity is only going one way, and that's up," said Bruce Rothney, chief executive of Barclays Canada.
"We're living in a slower growth environment. Everyone's looking for organic growth where they can, but in a world where cost structure starts to take on increased importance, scale is going to be important and that'll drive more M&A."
Others agreed the current environment is spurring larger deals.
"There's more confidence in management suites and boardrooms that the recovery is more sustained," said Dougal Macdonald, head of Morgan Stanley Canada. "Nonetheless, because it's low growth, M&A has become a tool for companies to enhance growth and the markets are supportive and rewarding strategically and financially compelling M&A."
Bankers said another factor driving deals has been the health of equity markets.
"Strong equity markets have given clients confidence that they can finance deals, and the equity issuance pipeline has been very robust," said David Rawlings, CEO of JPMorgan Canada.
Reporting by Euan Rocha and John Tilak; Editing by Peter Galloway