TORONTO, July 2 (Reuters) - Royal Bank of Canada was the top adviser on Canadian equity issues in the first half of 2015 as acquisitions and the energy industry’s need to strengthen balance sheets fueled record high deal flow, according to data from Thomson Reuters.
The investment banking units of Bank of Montreal and Canadian Imperial Bank of Commerce rounded out the top three by value of deals, the figures showed.
Equity financings rose 40 percent in the period to C$30.3 billion ($24.12 billion), a record high total for the first half.
A C$2 billion equity financing deal by Element Financial Corp was the biggest year-to-date, followed by Valeant Pharmaceuticals International’s C$1.9 billion offering.
Element raised the capital to make acquisitions and on June 29 announced a deal to buy a part of General Electric Co’s vehicle fleet-management business for $6.9 billion.
“That is a real testament to investor confidence in Element, and it also speaks to the strength of the market we’re in,” said Derek Neldner, head of Canadian investment banking at RBC Capital Markets. BMO, Barclays, CIBC and boutique firm INFOR Financial were other advisers on the Element financing.
“Investors have shown a willingness to step up and support companies on acquisitions,” Neldner said.
The year started off with a flurry of energy-sector deals as producers, hit by lower oil prices, shored up their balance sheets. The oil and gas industry remained active in the second quarter with equity fundraisings tied to acquisitions.
Examples included Crescent Point’s C$660 million offering to support its planned acquisition of Legacy Oil + Gas . PrairieSky Royalty raised C$180 million to fund acquisitions.
“2015 is shaping up to be a record year for Canadian equity issuances,” said Benoit Lauzé, head of equity capital markets at CIBC, which advised PrairieSky on its financing.
“The North American economy is in good shape, and deals are clearing the market well.”
Nine deals have been around a billion dollars or more this year.
“It’s been a year of very large transactions,” said John Manning, a managing director of equity capital markets at BMO Capital Markets. “The market has truly embraced acquisition stories.”
Mining deals included a C$1.2 billion offering by Tahoe Resources, led by GMP Securities and BMO.
The other driver for equity issues was initial public offerings, which included Shopify and Stingray Digital .
$1=$1.26 Canadian Reporting by John Tilak and Euan Rocha; Editing by Peter Galloway