Canadian equity financing deals fall to 27-year low amid market volatility | Jobi Cool

(This Oct. 6 story has been corrected to change the appointment of John Clifford to COO from CEO in the last paragraph.)

by Divya Rajagopal

TORONTO (Reuters) – A slowdown in Canada’s mergers and acquisitions activity extended into the third quarter as volatile stock markets and rising borrowing costs dampened sentiment for deal-making, with equity issuance falling to a 27-year low.

Despite the steep decline, some bankers are beginning to see an opportunity. HSBC Plc’s potential sale of its Canadian unit, worth up to $US10 billion ($7.3 billion), and Dye & Durham’s $US1.27 billion ($815.85 million) bid for Link Administration’s corporate markets and banking units are among of the transactions that could keep bankers busy for the rest of the year.

M&A deals in the three months ended Sept. 30 fell 52% to $37 billion, the lowest since 2020, and brought the figure for the first nine months of the year to $182 billion, down 28% from a year ago, the data showed. published by Refinitiv on Thursday. The decline in the volume of Canadian mergers and acquisitions is in line with global trends.

Canadian technology company OpenText Corp’s $5.7 billion bid for Britain’s Micro Focus International PLC was the biggest deal last quarter, while Domtar Corp’s $3.2 billion acquisition of Resolute Forest Products Inc.

JPMorgan Chase was the top M&A adviser, working on $34 billion worth of deals in the first nine months, followed by Morgan Stanley and TD Securities.

Canadian equities and equity-related issuance fell 77% in the first nine months to $11 billion, the lowest nine-month tally since 1995, Refinitiv said.

“Dealing in Canada continues to see lower market sentiment and volume, similar to other markets around the world, but we still see meaningful opportunities in the current environment,” said Alex Graham, head of Rothschild Canada.

Royal Bank of Canada led the league table for equity issuance, securing approximately C$2 billion in equity transactions, followed by Scotia Bank and Bank of Montreal.

Power and energy companies led the equity financing, raising $3.1 billion in the first nine months of 2022.

“I think there’s a lot of uncertainty right now about what the next few months will bring,” said John Clifford, chief operating officer of McMillan LLP, a Toronto law firm specializing in mergers and acquisitions.

($1 = 1.3722 Canadian dollars)

($1 = 1.5567 Australian dollars)

(Reporting by Divya Rajagopal; Editing by Jonathan Oatis)

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