Canadian equity issues reached a six-year high in 2015 with a flurry of energy-sector deals and a few large transactions, according to data released by Thomson Reuters on Thursday.
The 13 percent increase to $42.6 billion came despite a slowdown in deal activity in the latter part of the year, when a spike in volatility and further pullback in oil prices weighed on sentiment.
Royal Bank of Canada topped the league tables for underwriting equity issues, followed by Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce and Toronto Dominion Bank.
Large transactions, which included Element Financial Corp‘s $2 billion issue and a $2.2 billion offering by Emera, helped offset an overall decline in the number of deals. Other marquee deals included an initial public offering by Hydro One, which was one of Canada’s biggest ever.
“A longer, lower commodity price is certainly going to increase the probability of equity financings,” said Kirby Gavelin, head of equity capital markets at RBC. He expects continued market volatility in 2016.
Energy deals dominated activity in 2015 as companies moved to strengthen their balance sheets.
“The window is still open for energy companies to raise money if they want to,” said Benoit Lauzé, CIBC’s head of equity capital markets.
Market volatility jumped during the summer, triggered by concerns about China’s economic growth. An equity market selloff in China earlier this week sparked another global wave of market weakness.
“Looking out into 2016, there is an unusual degree of uncertainty,” said Peter Miller, head of Canadian equity capital markets at BMO, which was the top overall adviser on IPOs in Canada in 2015.
Cross-border activity increased, with Canadian companies using financings to fund acquisitions in the United States.
“It was really a cross-border year,” said Brad Hardie, head of financial institutions at BMO Capital Markets. “It’s a theme that will drive financial services’ financings in 2016.”
Initial public offerings, which also included Shopify‘s successful listing, recorded their strongest year since 2010.
Some advisers expect the market choppiness to weigh on IPOs in 2016.
“Volatility is an evolving trend that is starting to ratchet up,” said Stikeman Elliott partner Curtis Cusinato, who advised on Shopify’s IPO. “And it will have an impact on deal activity.”
(Reporting by John Tilak and Euan Rocha; Editing by Lisa Von Ahn)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of Reuters/Mark Blinch