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Global investment banks played a major role in Canada’s biggest merger and acquisition deals in the first quarter this year as two megadeals helped push total deal volumes to their highest level in almost five years.

The total value of takeover deals announced in the quarter hit US$114.9-billion, the most since the third quarter of 2016. That figure is up 44.3 per cent from the fourth quarter of 2020, and stands tall over the US$29.3-billion of deals done in the first quarter of 2020, when the COVID-19 pandemic took hold in North America and shut down much of the economy and the capital markets.

Deal data compiled by Refinitiv show that six of the top 10 takeover advisers – ranked by the value of the deals they advised on – were global brokers, with BofA Securities leading the quarter. Domestic dealers BMO Capital Markets and TD Securities placed second and third respectively, with U.K.-based Barclays and Morgan Stanley rounding out the top five.

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In the world of initial public offerings, CIBC World Markets led the quarter with US$348.7-million raised, followed by four global investment banks: JP Morgan, Barclays, Morgan Stanley and BofA Securities.

“Particularly when there are a few very large transactions in a period you see U.S. [and] global banks pop into the league tables perhaps more prominently than they do regularly,” said Adam Givertz, a partner and head of the Canadian practice group at Paul, Weiss, Rifkind, Wharton & Garrison LLP.

That trend played out this quarter, with BofA advising on the quarter’s two largest acquisitions: Canadian Pacific Railway Ltd.’s US$28.7-billion offer for Kansas City Southern, and Rogers Communications Inc.’s $26-billion bid for Shaw Communications Inc. Those two transactions made up 45 per cent of the total value of deals announced in the quarter.

Jeff Hamilton, BofA’s head of Canadian investment banking, said the company has benefited from its ability to offer global and regional expertise to Canadian clients. “This unique combination is an important differentiator, particularly on larger, more complex transactions and cross-border situations,” he said.

Dan Barclay, CEO of BMO Capital Markets, said his firm and many other investment banks don’t limit their businesses by borders nowadays.

“When we think about ourselves, we think of ourselves as North American now, not Canadian,” Mr. Barclay said. “I actually have more bankers in the U.S than in Canada, more revenues now in the U.S. than I have in Canada.”

The same goes for other Canadian investment banks, according to Mr. Givertz.

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“[Some Canadian firms] get more of their investment banking revenue from the U.S. than they do from Canada,” he said. “You see them competing in those markets in ways that they didn’t 10 years ago.”

Special purpose acquisition companies, or SPACs, have not taken off in the Canadian market the way they have in the U.S. in the past year, but Sustainable Opportunities Acquisition Corp.’s acquisition of DeepGreen Metals for 2.9-billion was the sixth-largest deal in the first quarter. Mr. Givertz expects more Canadian SPAC transactions in the near future.

“We have a number of potential SPAC transactions for Canadian companies that we’re working on, so there’s a lot of activity coming there,” he said.

Investment bankers expect the current level of deal flow to be sustained for the rest of the year.

“We expect the current momentum in M&A activity to continue through 2021,” said Marc Daniels, head of Canadian M&A at BofA. “Corporates are seeking to enhance growth, scale and efficiency coming out of the pandemic, while overall activity is further supported by strong equity markets, ongoing fiscal stimulus and record amounts of capital available to corporates, private equity and SPACs.”

Mr. Barclay expects “a banner couple of years” ahead for takeover activity, in part because of deals that were hard to execute during a pandemic. Mining deals, for example, require physical due diligence, and many bankers are currently eschewing air travel.

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“For those of us in Canada, we have trouble thinking about what the future will feel like,” Mr. Barclay said. “In my U.S. operations, it’s completely different. In New York City, if you’re over 30, you can get a vaccine.”

TOP banks for M&a

Ranking value* (U.S. billions)

Rank

Bank

No. of deals

BofA Securities

$50.5

2

BMO Capital Markets

43.5

8

TD Securities

38.3

11

Barclays

35.8

9

Morgan Stanley

34.3

7

TOP m&a deals

Ranking value* (U.S. billions)

Rank

Target

Kansas City Southern

$28.7

21.8

Shaw Communications

Inter Pipeline

9.9

Brookfield Property Part.

6.5

3.7

Seven Gen. Energy

TOP m&a historical

Ranking value* (U.S. billions)

Rank

Quarter

No. of deals

1st quarter 2021

$114.9

1,097

3rd quarter 2016

100.0

609

2nd quarter 2015

82.2

658

1st quarter 2017

82.2

1,017

4th quarter 2020

79.6

1,098

TOP banks for ipos

Ranking value (millions)

Rank

Bank

No. of issues

CIBC World Markets

$348.7

3

JP Morgan

308.6

2

Barclays

271.9

1

271.9

1

Morgan Stanley

BofA Securities

271.9

1

*Including debt of target

THE GLOBE AND MAIL, SOURCE: refinitiv

TOP banks for M&a

Ranking value* (U.S. billions)

Rank

Bank

No. of deals

BofA Securities

$50.5

2

BMO Capital Markets

43.5

8

TD Securities

38.3

11

Barclays

35.8

9

Morgan Stanley

34.3

7

TOP m&a deals

Ranking value* (U.S. billions)

Rank

Target

Kansas City Southern

$28.7

Shaw Communications

21.8

9.9

Inter Pipeline

Brookfield Property Part.

6.5

Seven Generations Energy

3.7

TOP m&a historical

Ranking value* (U.S. billions)

Rank

Quarter

No. of deals

1st quarter 2021

$114.9

1,097

3rd quarter 2016

100.0

609

2nd quarter 2015

82.2

658

1st quarter 2017

82.2

1,017

4th quarter 2020

79.6

1,098

TOP banks for ipos

Ranking value (millions)

Rank

Bank

No. of issues

CIBC World Markets

$348.7

3

JP Morgan

308.6

2

Barclays

271.9

1

271.9

1

Morgan Stanley

BofA Securities

271.9

1

*Including debt of target

THE GLOBE AND MAIL, SOURCE: refinitiv

TOP banks for M&a

Ranking value* (U.S. billions)

Rank

Bank

No. of deals

BofA Securities

$50.5

2

BMO Capital Markets

43.5

8

TD Securities

38.3

11

Barclays

35.8

9

Morgan Stanley

34.3

7

TOP m&a deals

Ranking value* (U.S. billions)

Rank

Target

$28.7

Kansas City Southern

Shaw Communications

21.8

Inter Pipeline

9.9

6.5

Brookfield Property Part.

Seven Generations Energy

3.7

TOP m&a historical

Ranking value* (U.S. billions)

Rank

Quarter

No. of deals

1st quarter 2021

$114.9

1,097

3rd quarter 2016

100.0

609

2nd quarter 2015

82.2

658

1st quarter 2017

82.2

1,017

4th quarter 2020

79.6

1,098

TOP banks for ipos

Ranking value (millions)

Rank

Bank

No. of issues

CIBC World Markets

$348.7

3

JP Morgan

308.6

2

Barclays

271.9

1

Morgan Stanley

271.9

1

BofA Securities

271.9

1

*Including debt of target

THE GLOBE AND MAIL, SOURCE: refinitiv

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