Royal Bank of Canada took the top
spot for arranging stock sales in Canada last year, displacing
Toronto-Dominion Bank (TD) in the slowest year for equity financings
since 2008.
Royal Bank’s RBC Capital Markets unit arranged $5.63
billion in 68 equity financings, including Hudson’s Bay Co.’s (HBC)
initial public offering, according to data compiled by
Bloomberg. Bank of Montreal (BMO)’s BMO Capital Markets unit rose to
second, with 46 sales that raised $4.87 billion, while Toronto-
Dominion’s TD Securities unit slipped to third.
“Last year — excluding 2008 — was one of the weakest
we’ve seen over the last seven years,” Peter Miller, head of
equity capital markets in Canada for BMO Capital Markets, said
in an interview in Toronto. “All the uncertainty that’s around
Europe and then China last year, with the commodity prices, have
challenged the market.”
Canadian equity financings this year will be fueled by
investor appetite for dividend-paying stocks and high-yield real
estate investment trusts as low interest rates drive demand for
higher returns, according to investment bankers.
“The same themes that played out last year are probably
going to continue in 2013, with the demand coming from both
retail investors and institutions,” Sante Corona, head of
equity capital markets at TD Securities, said in an interview
from Toronto. “That manifests itself in demand for dividend-
paying common shares, REITs, preferred shares and convertible
debentures. I don’t think that’s going to change.”
2012 Sales
The Standard Poor’s/TSX Composite Index, Canada’s
benchmark stock gauge, rose 4 percent last year, trailing every
developed stock market except Portugal and Spain. The Canadian
economy will slow to a 1.8 percent rate of growth in 2013, from
2 percent last year and 2.6 percent in 2011, according to the
median estimate of 29 analysts surveyed by Bloomberg. That would
be the slowest annual pace since the recession of 2009 and below
economists’ estimates for 2 percent growth in the U.S. in 2013.
Companies raised $29.3 billion in Canada from IPOs,
secondary sales and convertible debentures in 2012, down 7.3
percent from the $31.6 billion raised in 2011, Bloomberg data
show. Last year was the slowest since 2008, when companies
raised $19 billion.
Canadian Imperial Bank of Commerce ranked fourth for equity
financings, followed by Bank of Nova Scotia, both unchanged from
2011.
The figures and rankings, which exclude preferred share
sales and self-led deals, are current as of Dec. 31 and are
subject to change as more transactions are recorded.
RBC Capital Markets was also the No. 1 arranger for IPOs
and oversaw the highest number of equity financings after
Canaccord Financial Inc.’s Canaccord Genuity unit, which
arranged 86 sales in the year.
Calgary Dominates
“The results, in terms of not only total dollar value but
also number of book-run transactions, reflect our strategy,”
Kirby Gavelin, RBC’s head of equity capital markets in Canada,
said in an interview in Toronto. “We are focused on a broad
range of sectors in Canada and both larger and smaller
capitalization issuers in those sectors.”
Calgary-based companies dominated the 10 biggest
transactions last year, with secondary stock sales from firms
including Gibson Energy Inc. (GEI), MEG Energy Corp. and AltaGas Ltd.
Crescent Point Energy Corp. (CPG), the most acquisitive Canadian
energy company this year by number of deals, raised the most,
with about C$2 billion ($2 billion) in three stock sales.
Scaled Back
A slump among Canadian IPOs continued. Companies raised
$2.63 billion in initial public offerings, down 15 percent from
2011 and the slowest year since 2009, according to Bloomberg
data.
Hudson’s Bay’s C$365 million sale in November was the
largest Canadian-listed IPO, followed by the C$300.8 million
offering for Vancouver-based miner Ivanplats Ltd. (IVP), Bloomberg
data show. Sunshine Oilsands Ltd., based in Calgary, raised
HK$4.5 billion ($580 million) its IPO in February, though it
chose to list in Hong Kong instead of Canada. Sunshine pursued a
secondary listing in Toronto and shares began trading on Nov.
16.
Some IPOs, including Crius Energy Trust (KWH-U) and Hudson’s Bay,
had to be scaled back, while others including Gateway Casinos
Entertainment Ltd., Meranex Energy Trust and Agellan Commercial
Real Estate Investment Trust (0623351D) were pulled or postponed.
“The IPO market has been one that’s required work,” said
RBC’s Gavelin. “You’ve got investors who are very focused on
value and, as a result, are certainly prepared to reflect their
views on what an appropriate price is.”
Yield Oriented
HealthLease Properties REIT was the best performing among
Canadian IPOs that raised at least $100 million in the year,
returning 11 percent since its initial sale in June, according
to Bloomberg data. Dundee Industrial REIT (DIR-U) was the second-best,
with a 10 percent return since its August IPO. Among the worst
performers, Regal Lifestyle Communities declined 8.5 percent
since its October offering while Argent Energy Trust fell 7.3
percent since its initial sale in August.
Canadian REITs raised almost $500 million in seven IPOs in
2012, more than any other industry in Canada, Bloomberg data
show.
“There’s been a very large backlog of IPOs building up
amongst a variety of industries,” BMO’s Miller said. “A lot of
it is yield oriented. We hear there’s a lot of REITs in the
pipeline.”
Loblaw Cos., Canada’s largest grocery chain, plans to
create a REIT and sell units in an IPO in mid 2013, the
Brampton, Ontario-based company said Dec. 6. Loblaw said it will
contribute about 35 million square feet of real estate with a
current value of more than C$7 billion, and intends to retain a
“significant” majority interest.
REIT Opportunity
Hudson’s Bay Chief Executive Officer Richard Baker said the
Toronto-based retailer may consider something similar for its 11
million square feet of real estate.
“We’ve always believed that sometime in the future we
could have the opportunity to create a REIT similar to what
Loblaw’s is proposing,” Baker said on a Dec. 11 conference call
with analysts.
To contact the reporter on this story:
Doug Alexander in Toronto at
dalexander3@bloomberg.net
To contact the editors responsible for this story:
David Scheer at
dscheer@bloomberg.net;
David Scanlan at
dscanlan@bloomberg.net
RBC Regains Top Spot for Stock Sales From TD
Brent Lewin/Bloomberg
A Royal Bank of Canada sign is displayed in the financial district of Toronto, Ontario.
A Royal Bank of Canada sign is displayed in the financial district of Toronto, Ontario. Photographer: Brent Lewin/Bloomberg