TORONTO, June 4 (Reuters) - Credit Suisse is building a specialized team in Canada to take advantage of an increase in interest from big energy and financial players in oil and gas assets that have been put on the block by companies weakened by lower oil prices.
Senior Credit Suisse executives said on Thursday the bank is putting together an acquisition and divestiture (A&D) team that will initially be comprised of two or three members, and that is likely to be expanded in time.
The team will be based in Calgary and will complement work already being done by the firm’s A&D team in Houston. A&D teams carry out the complex engineering and technical analysis needed to value oil and gas deposits far beneath the earth’s surface.
Although weaker oil and gas prices have put a damper on the energy sector, asset sales have been strong as some companies strained by heavy debt loads have been forced to sell assets, while energy companies in stronger positions and financial players have been looking to scoop up assets.
“There are a number of pension funds or other large asset managers that like the idea of having direct investments in the sector, to complement playing it through public equities,” said Tom Greenberg, who heads Credit Suisse’s energy investment banking business in Canada.
Strong A&D teams have been vital for investment banks looking to generate more business. These teams have helped smaller firms like Evercore Partners, Jefferies LLC and Simmons & Co compete against larger competitors.
Demand for A&D bankers has also been growing due to rising direct investment in physical assets by financial players.
In March, UBS poached the vast majority of Bank of Montreal’s A&D team in Houston.
Greenberg said the interest from private equity firms and pension funds, which are looking to invest in the sector but typically lack the in-house expertise to value these assets, is a key reason that Credit Suisse is looking to add A&D expertise in Canada.
Last month, Brookfield Asset Management Inc, one of Canada’s top investment management firms, said it is scouting for oil assets in the oil-rich province of Alberta.
Two top pension fund managers, the Canada Pension Plan Investment Board (CPPIB) and the Ontario Teachers’ Pension Plan, also recently outlined similar ambitions.
“Despite an otherwise volatile oil and gas market, we are seeing significant activity and we expect that to continue going forward,” said Ron Lloyd, the bank’s head of Canadian operations. (Editing by Peter Galloway)