A number of companies – including Saputo Inc., seen here – also issued equity during the third quarter to help finance new acquisitions or pay down debt incurred during previous ones.The Canadian Press
Canadian markets saw twice as much equity issued in the third quarter this year as the same period in 2018, thanks to a flurry of offerings by real estate investment trusts and by companies looking to finance acquisitions.
Proceeds from Canadian equity issuance totalled $10.4-billion in the quarter, according to the latest tallies from Refinitiv, up from $5.2-billion during the same period last year.
Global trade tensions and a gloomy economic outlook had hung over Canada’s equity markets for the first half of the year, with a number of companies opting to delay their capital-raising plans. The recent uptick of equity-market activity comes after a string of weak quarters for Canadian equity financings.
Tyler Swan, managing director and head of execution in the equity capital markets division at CIBC World Markets, said low interest rates led to a surge in activity by real estate investment trusts (REITs), with nine equity deals coming to market during the third quarter.
The REIT sector tends to do well with investors during times of geopolitical turmoil and economic uncertainty, according to Mr. Swan.
“Investors are a little more cautious,” he said. “One of the sectors that they gravitate to in those types of environments is the REIT sector."
A number of companies – including Intact Financial Corp., Brookfield Infrastructure Partners LP, Northland Power Inc. and Saputo Inc. – also issued equity during the third quarter to help finance new acquisitions or pay down debt incurred during previous ones, Mr. Swan said.
“The common theme among those transactions is that these were blue-chip Canadian companies with strong shareholder bases that were raising equity to finance acquisition strategies," he said.
Two large offerings in the quarter by Restaurant Brands International Inc., totalling more than $4-billion, also contributed to the uptick, and bolstered the position of their lead underwriter, Morgan Stanley, in Refinitiv’s rankings. The U.S.-based investment bank snatched first place for Canadian equity deals for the first nine months of 2019.
Top Banks for Equities (excluding self-led deals)
Rank
Company
Amount raised (billions)
No. of issues
Morgan Stanley
$4.5
3
CIBC World Markets
2.7
27
BMO Nesbitt Burns
2.3
37
TD Securities
2.2
22
RBC Dom. Securities
2.1
28
Top Banks for Corporate Debt (excluding self-led deals)
Rank
Company
Amount raised (billions)
No. of issues
RBC Dom. Securities
$13.5
72
CIBC World Markets
10.5
59
TD Securities
7.7
44
BMO Nesbitt Burns
7.6
40
Scotia Capital
5.6
38
Top Banks for M&A (any Canadian involvement announced)
Rank
Adviser
Value of deals (billions, US$)
No. of deals
TD Securities
$36.3
22
Goldman Sachs
33.8
15
RBC Dom. Securities
23.7
37
BMO Nesbitt Burns
23.3
28
BoA Merrill Lynch
21.0
12
john sopinski/the globe and mail
source: refinitiv
Top Banks for Equities (excluding self-led deals)
Rank
Company
Amount raised (billions)
No. of issues
Morgan Stanley
$4.5
3
CIBC World Markets
2.7
27
BMO Nesbitt Burns
2.3
37
TD Securities
2.2
22
RBC Dom. Securities
2.1
28
Top Banks for Corporate Debt (excluding self-led deals)
Rank
Company
Amount raised (billions)
No. of issues
RBC Dom. Securities
$13.5
72
CIBC World Markets
10.5
59
TD Securities
7.7
44
BMO Nesbitt Burns
7.6
40
Scotia Capital
5.6
38
Top Banks for M&A (any Canadian involvement announced)
Rank
Adviser
Value of deals (billions, US$)
No. of deals
TD Securities
$36.3
22
Goldman Sachs
33.8
15
RBC Dom. Securities
23.7
37
BMO Nesbitt Burns
23.3
28
BoA Merrill Lynch
21.0
12
john sopinski/the globe and mail source: refinitiv
Top Banks for Equities (excluding self-led deals)
Rank
Company
Amount raised (billions)
No. of issues
Morgan Stanley
$4.5
3
CIBC World Markets
2.7
27
BMO Nesbitt Burns
2.3
37
TD Securities
2.2
22
RBC Dominion Securities
2.1
28
Top Banks for Corporate Debt (excluding self-led deals)
Rank
Company
Amount raised (billions)
No. of issues
RBC Dominion Securities
$13.5
72
CIBC World Markets
10.5
59
TD Securities
7.7
44
BMO Nesbitt Burns
7.6
40
Scotia Capital
5.6
38
Top Banks for M&A (any Canadian involvement announced)
Rank
Adviser
Value of deals (billions, US$)
No. of deals
TD Securities
$36.3
22
Goldman Sachs
33.8
15
RBC Dominion Securities
23.7
37
BMO Nesbitt Burns
23.3
28
BoA Merrill Lynch
21.0
12
john sopinski/the globe and mail source: refinitiv
The increase in equity activity, however, did not translate to a greater number of initial public offerings.
PwC Canada said there were no IPOs on the Toronto Stock Exchange during the most recent two quarters, though a number of companies did go public on other domestic bourses, including the Canadian Securities Exchange and the TSX Venture Exchange, during that period. The last time there were no IPOs on the TSX’s senior board for two straight quarters was in 2016, said Geoff Leverton, PwC’s national IPO leader.
The third quarter, which occurs during the summer, is typically slow for IPOs.
“July and August are not particularly a good time to be out marketing an IPO,” Mr. Leverton said. But, he added, “that’s not to say that there aren’t preparations going on – and I do know that there are companies in the process of preparing for an IPO.”
In total, proceeds from equity issuance for the first three quarters of the year amounted to $22.3-billion, according to Refinitiv.
Nitin Babbar, head of the Canadian equity capital markets business at RBC Dominion Securities, said he expects to see “quite a bit of activity” in the remainder of the year. In addition to those companies planning public market debuts, there are others who are already public looking to raise capital to fund acquisitions.
But, Mr. Babbar added, it all depends on whether markets are stable – “and as we sit here today, there are concerns about a recession.”
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Alexandra Posadzki