Canadian M&A activity soars on surge in outbound deal flow

By Euan Rocha and John Tilak
TORONTO, Jan 7 (Reuters) - A slew of major bets outside
Canada by some of the country's top pension funds, banks,
investment management firms and insurers propelled Canadian deal
activity to its second-highest level ever in 2015.
Thomson Reuters data released on Thursday showed $278.69
billion of deal activity involving Canadian entities in 2015, up
37 percent from a year ago, and lagging only a pre-crisis high
hit in 2007.
JPMorgan (N:JPM) JPM.N , lead advisor to General Electric (N:GE) GE.N on
the sale of its finance assets, claimed top spot in the Canadian
M&A league tables as big parts of that GE portfolio were scooped
up by Canadian institutions like Canada Pension Plan Investment
Board, Bank of Montreal BMO.TO and Element Financial EFN.TO .

"The real story around Canadian M&A activity this year was
the outbound activity that was up some 175 percent and drove the
lion's share of activity" said John Armstrong, head of Canadian
M&A at BMO Capital Markets.
Morgan Stanley (N:MS) MS.N , Royal Bank of Canada RY.TO , Bank of
America BAC.N and BMO rounded out the top five in Canada, with
other international banks like Citigroup (N:C) C.N , Credit Suisse
CSGN.VX and Barclays BARC.L , placing high in the rankings.
Among the domestic banks CIBC came in third, and a new
player, INFOR, emerged as the top independent Canadian
investment bank.
"The continuing emergence of the Canadian pension funds as
top-tier dealmakers on the global stage was solidified in 2015,"
said Ron Lloyd, head of Credit Suisse Canada.

"Our pipeline remains very strong," said Barclays Canada
head Bruce Rothney, adding he expects Canadian pension funds to
look at further resource sector investments as commodity prices
hover around cyclical lows.
"There will be some creative deals that will get done in the
resource space," said Rothney.
The strong M&A data from 2015 shrouded the fact that soft
commodity prices have muted resource-sector activity that
typically accounts for a large part of Canadian deal flow. But,
bankers now expect weak commodity prices to spur more
opportunistic deals.
"M&A activity in the energy sector is likely to pick up over
the next 12 to 18 months," said David Rawlings, head of JPMorgan
Canada. "There should be an opportunity to create real franchise
value for well-capitalized companies."
This in turn has increased optimism around 2016.
"Canada is set up for increased M&A," said Neil Selfe, head
of INFOR. "However, global macroeconomic uncertainty and rising
interest rates are likely to have a moderating effect on what
would otherwise be a vibrant M&A environment."