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Thursday, July 2, 2009 04:48 PM
NBF ramps up energy coverage
National Bank Financial is making a serious commitment to the energy sector, hiring a dedicated oil and gas stock trader from Macquarie Capital Markets Canada on Thursday, weeks after expanding its Calgary investment banking coverage.
NBF hired Bob Bastianon as a director in its institutional equity group, in what amounts to a hybrid role. Mr. Bastianon will be the investment dealer’s liability trader on energy stocks - that means he can commit the firm’s capital to facilitating trades for clients - and will also be a regular sales trader on the equity desk. He’ll be based in Toronto, and help NBF broaden the service it offers investors, by building its expertise in a key sector of the domestic market. NBF is already home to five energy-focused research analysts.
Mr. Bastianon has spent two decades on the Street, and one of his previous employers was GMP Securities, where he worked closely with Calgary-based investment banker Sandy Edmonstone.
Last month, Mr. Edmonstone signed on at National Bank Financial in Calgary, with a mandate to win more business from small to mid-tier oil and gas companies. The dealer has long-standing relationships with senior oil patch players.
Mr. Bastianon also worked at Midland Walwyn a few years back. The head of all things equities-related at National Bank Financial is Gerry Throop, who once run equities at Midland Walwyn. Mr. Bastianon is also a veteran of BMO Nesbitt Burns.
Macquarie just bought energy-focused investment dealer Tristone Capital, so energy is clearly a focus for the dealer, and losing Mr. Bastianon’s services is a setback
Link to this postThursday, July 2, 2009 03:13 PM
National Bank Financial takes AlphaPro stake
Andrew Willis
National Bank Financial is building an interesting collection of minority postions in wealth management firms, taking a 20 per cent stake in ETF manufacturer AlphaPro Management on Thursday.
NBF is buying into a division of Jovian Capital JOV-T that creates exchange-traded funds, or EFTs, a rapidly growing sector of the retail financial market. No value was disclosed on the transaction, and relatively little cash is likely changing hands, as AlphaPro is a small player in money management, with just $64-million in assets under management.
However, this investment has a great deal of potential, as did NBF’s decision earlier this year to take a 12.5 per cent stake in independent investment dealer Wellington West, which has a strong retail franchise. With the backing of National Bank’s NA-T investment dealer arm, these independent platforms get growth capital. Down the road, it’s not hard to imagine National Bank Financial taking a larger stake.
AlphaPro bills itself as the “the only provider of actively managed ETFs in Canada.”
“As interest in ETFs continues to grow, we believe actively managed ETFs will significantly grow their market share. AlphaPro intends to be at the forefront in developing this market,” said Adam Felesky, CEO of AlphaPro. Adding NBF’s expertise in manufacturing and distribution of ETFs and other structured financial products can only help Mr. Felesky expand his business.
Jovian Capital has a total of $12-billion under management and is controlled by its executives and a relatively newcomer to money management, Calgary-based Murray Edwards, the lawyer-turned-oil baron who purchased a 31.5 per cent stake in the firm in December, 2007.
Thursday, July 2, 2009 01:10 PM
Top 10 advisers in a slow M&A market
Andrew Willis
The stock market rally didn’t translate into the CEO confidence needed to launch takeovers, as the latest statistics on mergers and acquisitions show deal making is in the doldrums.
The pace of North American takeovers fell 46.6 per cent in the second quarter for 2009, compared to the same three-month period in 2008, according to a report released Thursday by a service named mergermarket . The value of deals dropped by 55 per cent, year-over-year.
“Another slow quarter for M&A suggests that increasing investor optimism has yet to spill into the North American deal-making community,” said mergermarket’s commentary on the statistics.
Drilling down in the data on a global basis, mergermarket found the biggest hit is seen in the upper end of the mid-market, which it measures as $250-million to $500-million (U.S.) In this space, total global deal value is down 67 per cent compared with the first half of 2008, while the volume of takeovers dropped 64.6 per cent.
Here are the first cut at league tables for Canadian investment banks and law firms through the first six months of 2009, provided by mergermarket. Those who worked on the Suncor acquisition of Petro-Canada feature prominently on these lists, as it was by far the largest transaction of the year:
Top 10 Canadian financial advisors, by value:
RBC Dominion - $38.7-billion - 15 deals
CIBC World Markets - $23.7-billion - 11 deals
Morgan Stanley - $23.5-billion - 8 deals
Deutsche Bank - $18.9-billion - 2 deals
Credit Suisse - $9-billion - 3 deals
Scotia Capital - $5.2-billion - 11 deals
Goldman Sachs - $4.9-billion - 6 deals
Peters & Co. - $4.7-billion - 7 deals
Rothschild - $3.6-billion - $5 deals
BNP Paribas - $3.3-billion 1 deal
Top 10 Canadian financial advisers, by volume:
RBC Dominion - 15 deals, $38.7-billion
BMO Nesbitt Burns - 12 deals - $2.7-billion
CIBC World Markets - 11 deals - $23.8-million
Scotia Capital - 11 deals - $5.2-billion
Macquarie Group - 10 deals - $3.3-billion
Morgan Stanley - 8 deals - $23.5-billion
FirstEnergy Capital - 8 deals - $1.5-billion
TD Securities - 8 deals - $597-million
Peters & Co. - 7 deals - $4.7-billion
GMP Securities - 7 deals - $1.1-billion
Top 10 law firms, by value:
Blake, Cassels & Graydon - $24.8-billion - 26 deals
McCarthy Tetrault - $24.6-billion - 25 deals
Shearman & Sterling - $22.7-billion - 6 deals
Torys - $22.6-billion - 10 deals
Macleod Dixon - $19.8-billion - 9 deals
Osler, Hoskin & Harcourt - $13.2-billion - 17 deals
Stikeman Elliott - $12.3-billion - 25 deals
Fasken Martineau - $10.5-billion - 15 deals
Fraser Milner Casgrain - $9.2-billion - 4 deals
Vinson & Elkins - $9.1-billion - 2 deals
Top 10 law firms, by volume
Blake, Cassels & Graydon 26 deals
McCarthy Tetrault 25 deals
Stikeman Elliott 25 deals
Osler, Hoskin & Harcourt 17 deals
Fasken Martineau 15 deals
Torys 10 deals
Macleod Dixon 9 deals
Davies Ward Phillips & Vineberg 9 deals
Cassels Brock & Blackwell 8 deals
Borden Ladner Gervais 8 deals
Thursday, July 2, 2009 09:40 AM
Who wins under new Alberta oil regime
Andrew Willis
Alberta’s move to stimulate the oil patch has analysts looking favourably on oil and gas companies with robust capital spending plans.
Alberta is extending royalty incentives and drilling credits to boost what was a flagging sector of the provincial economy. Peters & Co. published a report Tuesday that showed the benefits from this program will flow to companies that plan relatively high levels of spending on exploration or new reserves.
“Financially challenged entities will not benefit significantly, because of their limited spending capabilities and low well counts,” said Peters & Co., a Calgary-based dealer that focuses on the energy sector.
To determine who will be the ‘winners’ under the new regime, Peters & Co. figured out which companies that can look forward to recovering more than 10 per cent of their capital spending in 2010 from the Alberta government. Energy companies plan to use the drilling credit to offset capital spending when they report financial results.
Peyto Energy Trust, Berens Energy, Paramount Energy Trust, Trilogy Energy Trust, Twin Butte Energy, Celtic Exploration, NAL Oil and Gas and ProspEx Resources all made Peters & Co.’s list of winners.
Thursday, July 2, 2009 08:50 AM
Canadian banks catch a break
Andrew Willis
Canadian banks may face weaker competition in bidding for troubled U.S. financial institutions, as American regulators push rules that make private equity takeovers more expensive.
The Federal Deposit Insurance Corp. (or FDIC) is expected to announce new bank takeover rules on Thursday that force buyers to pledge more funds should the lenders falter, according to Bloomberg.
The FDIC would take this step to avoid new leverage being injected into a banking system that’s been crippled by using too much leverage in the first place.
If Bloomberg’s got it right – they usually do – and new rules are in the offing, then private equity buyers face putting more capital into deals. That’s going to make bank purchases less attractive for these funds, and could open a door for Canadian bidders.
These regulatory moves follow the FDIC-administered auction of Florida-based BankUnited Financial Corp. in May. That bank drew the attention of Toronto-Dominion Bank TD-T. But after a hotly-contested bidding war, BankUnited went to a collection of private equity firms that included Blackstone Group and Carlyle Group.
Private equity funds spent $1-billion (U.S.) on investments in banks in May, according to Bloomberg. The FDIC has closed 45 U.S. banks so far this year.
Thursday, July 2, 2009 07:44 AM
RBC hires trio in London
Andrew Willis
It was a busy Canada Day in London from Royal Bank of Canada, with three executives hired to bolster the investment dealer arm of the country’s largest bank.
RBC Dominion Securities welcomed UBS Securities veterans Arif Hussein and Peter Drewienkiewicz to its currency and fixed income sales team. Mr. Hussein was head of sterling swaps at UBS in London, while Mr. Drewienkiewicz was an executive director in the fixed income derivatives group.
And Carmine Meoli was named head of ‘private banking solutions sales’ within the structured equity and commodity group in London. He spent the past 15 years of in structured products at ABN Amro and Deutsche Bank.
Over the past year, as many investment banks have shed talent, Royal Bank RY-T has added more than 300 executives to its global capital markets teams. The dealer is also profitably increasing market share in global fixed income and currency markets.
Tuesday, June 30, 2009 03:29 PM
Moody's targets Canadian banks
Andrew Willis
Moody’s warned on Tuesday that it is likely to chop the rating on $65-billion of the Canadian banks’ paper, a move that reflects lessons learned from foreign bailouts of troubled financial institutions.
A day after domestic rating agency DBRS cut the banks' ratings, New York-based Moody’s said it is contemplating chopping ratings by an average of two to three notches on subordinated debt, hybrid securities and preferred shares issued by the country's seven largest bank.
"These potential rating actions do not reflect on the underlying financial strength of the Canadian banking system, which Moody's views as one of the soundest globally," said Moody's senior vice-president Peter Routledge. "Rather, they would capture the risk that subordinated capital generally does not benefit from systemic support and take into consideration the risk posed by each instrument's features."
Moody’s explained in a news release that before the current financial meltdown, the rating agency “assumed that any support provided by national governments and central banks to shore up a troubled bank and restore investor confidence would not just benefit the bank's senior creditors but, at least to some extent, investors in its subordinated capital.”
In fact, when banks and insurers did hit the wall, and needed government support, subordinated creditors and owners of hybrid securities were left out of rescues. Moody’s noted that “in some cases, support packages have been contingent upon the banks' suspension of coupon payments on these instruments as a means to preserve capital.”
"Moody's does not presently see compelling evidence to suggest that the Canadian government would take different decisions on supporting bank subordinated capital investors than those taken most recently by other G7 and OECD countries," says Mr. Routledge. "In other words, the Canadian government would be likely to have bank subordinated capital investors share in the expense of recapitalizing a troubled Canadian bank in the future, in our opinion."
Moody’s is now reviewing what this all means for seven Canadian banks that have collectively issued $33.3 billion in outstanding subordinated debt, $5.5 billion in Tier 2A instruments, $10.5 billion innovative Tier 1 instruments, and $15.2 billion in non-cumulative perpetual preferred shares.
Tuesday, June 30, 2009 03:01 PM
UBS reunion gathers steam
Andrew Willis
UBS Securities has become one reunion party this summer, as the sales desk welcomes back its second executive in as many months.
Rick Lavoie, who spent seven years in equity sales at the Vancouver, San Francisco and Toronto desks of the global dealer before departing in 2008, will return to the fold in mid July. UBS lost a number of Canadian professionals in the last year, as the dealer’s Swiss parent cut back on bonus payments promised to staff.
Mr. Lavoie is coming back to a sales team headed by Michael Tait, who rejoined UBS this spring from Genuity Capital Markets. Head trader Larry Action also recently moved back in after a few years at GMP Securities. Mr. Lavoie rejoined the UBS sales desk just as veteran Patrick Drouin prepares to move to London, where he will head the European team that sells Canadian equities for the dealer.
Tuesday, June 30, 2009 03:10 PM
Canaccord lands U.K. equity head
Andrew Willis
Canaccord Capital showed it plans to ramp up its equity business in London by hiring a veteran of ABN AMRO as the new president of its U.K. division.
Giles Fitzpatrick is the new president of Canaccord Adams Ltd., the British arm of the Canadian dealer. He will focus building Canaccord's ties to institutional investors, with direct responsibility for stock trading, sales and research. The investment banking side of Canaccord CCI-T in London is run by Tim Hoare, the CEO of Canaccord Adams.
Mr. Fitzpatrick was most recently the CEO of Fox-Pitt, Kelton, a boutique dealer focused on the financial services sector. Prior to that, he spent five years as global head of equity trading, then head of European equities at ABN Amro.
Tuesday, June 30, 2009 01:56 PM
Genworth rolls out $850-million IPO
Andrew Willis
One of the largest IPOs seen this decade is ready to roll, as Genworth MI Canada sets the terms on an $850-million debut.
Genworth, the domestic arm of a U.S. mortgage insurer, will sell 44.7 million shares at $19 each, with underwriters holding an option to sell an additional $127-million of stock.
If the deal does total $977-million, this will be the largest initial public offering seen this year on the Toronto Stock Exchange, and dealers say that it will likely be the fourth largest IPO on the TSX since 2001.
The NYSE-listed parent is rebuilding its own balance sheet by selling a minority stake in its profitable Canadian subsidiary. Dutch insurer ING Group did much the same by selling a stake in its Canadian unit several years ago, then selling the entire company into public markets earlier this year.
The proceeds of this share sale will be split, with $753-million going to Genworth Financial, the U.S. parent, and $97-million earmarked for paying down debt and building the business of the Canadian unit.
CIBC World Markets, Goldman Sachs and Scotia Capital led the Genworth IPO. This deal is backed by most of the Street, as there are a total of 11 dealers in the selling syndicate. Genworth is clearly hoping to be covered by the entire Canadian dealer community.
Assuming the underwriters do exercise the over-allotment option, which they usually do, this IPO will result in the U.S. parent owning 56 per cent of the company, and public shareholders holding a minority stake.
Streetwise Contributors
Andrew Willis
Andrew Willis joined The Globe and Mail in September of 1995. His career has included stints at a number of publications, including The Financial Post, The Financial Times of Canada, Dow Jones/Wall Street Journal, and MacLean's magazine. He also did freelance writing for Investment Executive magazine. He appears on television for BNN TV and CBC Newsworld.
Andrew has co-written a book, The Bre-X Fraud, with business journalist Douglas Goold.
Read Streetwise Tuesday through Friday in the pages of Report on Business.
Boyd Erman
Boyd Erman is a long-time business journalist who has worked at Dow Jones, Bloomberg, and the National Post before joining the Globe and Mail. Over the years, his areas of coverage have included economics, monetary policy, debt markets and corporate finance.
In addition, he is a regular commentator and guest host on Business News Network.
