RBC leads rise in Canadian equity issues despite choppy markets

By John Tilak and Euan Rocha
TORONTO, Oct 2 (Reuters) - Royal Bank of Canada RY.TO led
a rise in the value of Canadian equity issues for the first nine
months of 2015, overcoming a slowdown in the third quarter due
to increased choppiness in equity markets.
Equity financings rose to C$36 billion ($27.23 billion) in
the period, compared with C$33.6 million a year ago, according
to Thomson Reuters data released on Friday.
BMO Capital Markets was No. 2 in the league table rankings,
followed by Bank of Nova Scotia BNS.TO . CIBC World Markets and
TD Securities rounded out the top five.
While deal activity is typically weak in the summer months,
the usual rebound after Labor Day did not happen as a surge in
volatility due to questions about China's economic growth
weighed on new issues going to the market.
"Some of the market turbulence we've seen has slowed down
deal activity. So issuers need to be a lot more nimble and
timing becomes more important," said Derek Neldner, head of
Canadian investment banking at RBC Capital Markets.
Going forward, "the theme of M&A-driven financing will be a
dominant one," he added.
The biggest deal of the year so far was a C$2.2 billion
equity raise by Canadian energy company Emera Inc EMA.TO in
the third quarter to help finance its planned acquisition of
U.S. electric and gas utility holding company Teco Energy Inc
TE.N for $6.44 billion. Including the assumption of debt, the
M&A deal is valued at $10.4 billion. Advisers for the equity
financing included Scotiabank , RBC and JPMorgan (NYSE:JPM) Securities
Canada.
Market volatility shot up in late August and remains at
fairly elevated levels, making it more challenging for
investment bankers to price issues.
"With higher volatility, it's riskier for underwriters and
issuers to address the market," said Peter Miller, head of
Canadian equity capital markets at BMO Capital Markets, which
claimed the top spot for advice on initial public offerings.
"As long as the volatility persists, it would have a
dampening effect on new issue activity."
With resource offerings falling out of favor due to a slump
in commodity prices, investors were searching for investment
ideas in other sectors.
The market uncertainty is having an outsized impact on
equity issues in the natural resource sectors, said Benoit
Lauzé, head of equity capital markets at CIBC.
"This year we're seeing significant focus on non-resource
opportunities," he said.
For Canadian M&A advisor rankings, see: ID:nL1N122069
($1 = 1.3219 Canadian dollars)