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RBC leads rise in Canadian equity issues despite choppy markets

Fri 2nd October, 2015 4:17pm
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 Securities 
    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) 
 (Reporting by John Tilak and Euan Rocha; Editing by Meredith 
 ((john.tilak@thomsonreuters.com; 1-416-687-7918; Reuters 
Messaging: john.tilak.reuters.com@reuters.net)) 
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