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A cup of Tim Hortons coffee is pictured Burger King Whopper at a Burger King restaurant in Toronto on Monday August 25, 2014.Chris Young/The Globe and Mail

Global mergers and acquisition volumes are at multiyear highs, and Canada has benefited from that momentum, boosting the country's investment banks in the first nine months of the year.

According to data from Thomson Reuters, the value of M&A deals involving a Canadian buyer or seller was up to $149.8-billion (U.S.) in the first three quarters, from $111.3-billion in the same period last year. RBC Dominion Securities advised more Canadian M&A deals than any other bank, with $43.6-billion worth of transactions, including a slice of the largest deal this year so far – the $14.6-billion tie-up of Tim Hortons Inc. and Burger King Worldwide Inc.

The doughnut deal stands out to Peter Buzzi, co-head of mergers and acquisitions at RBC, as does SNC-Lavalin Group Inc.'s sale of AltaLink LP to Berkshire Hathaway Energy Co. "It's a less well-known business than Tim Hortons … but that's an extremely attractive asset that was purchased by Berkshire Hathaway at a full price, and marked kind of a change in strategy for SNC," Mr. Buzzi said, noting that SNC used the proceeds to invest in an engineering construction business in Britain.

"Some of transactions we're seeing are those kinds of transactions where companies are changing their portfolio mix," Mr. Buzzi said.

As confident business leaders and relatively strong share prices encourage deals, financing has followed. "It has been a very active equity capital markets calendar," said John McCartney, head of global equity capital markets at Scotia Capital. Total equity sales hit $33.15-billion (Canadian) so far this year, excluding the banks' self-led deals, up from $22-billion last year. Scotia was the top underwriter, leading $5.41-billion in stock sales.

This has been the busiest year for equity issuance since 2009, Mr. McCartney said. But where 2009 was dominated by defensive financing to shore up capital in the storm of the recession, this year's strong performance has been driven largely by acquisitions.

One such large financing was Manulife Financial Corp.'s $1.76-billion stock sale to fund its $4-billion purchase of the Canadian operations of Standard Life. Scotiabank was the sole bookrunner on the financing and has a long history with the insurer, having led its IPO and other financings.

Other share sales were tied to international expansion plans, such as Veresen Inc.'s $1.43-billion (U.S.) purchase of Global Infrastructure Partners' half of the Ruby natural gas pipeline system in the Western United States, which Veresen funded in part through an $800-million (Canadian) bought deal. Similarly, when Encana Corp. sold its stake in PrairieSky Royalty Ltd. for $2.6-billion last month, it helped fund the purchase of Texas-based Athlon Energy Inc. for $6.6-billion (U.S.).

"Investing further in the growth initiatives of high quality familiar Canadian companies, while gaining portfolio exposure to the U.S. economic recovery, has been a winning formula for institutional investors this year," Mr. McCartney said. "There's definitely a cross-border trend here."

Mr. Buzzi also remarked on the tendency of Canadian pension funds to invest overseas, as well as Canadian corporations making investments outside of Canada, but noted that these trends have been in place for several years.

So far, the debt markets have kept pace with last year's highs, with issuance stronger than expected, said Moti Jungreis, head of fixed income, currencies and metals at TD Securities. In the first nine months of the year, total Canadian debt underwriting hit $127.6-billion, up from $127.2-billion in the same period last year, excluding self-led deals. RBC, TD Securities and CIBC World Markets were the top three investment banks in bonds.

Mr. Jungreis said the year has been characterized in part by higher issuance from non-financial companies, and by banks diversifying more of their debt funding abroad with buyers in the United States, Europe and even Australia.

What happens next is unclear. Mr. Jungreis says he's monitoring the markets closely, since the good times can come to an end swiftly. "The market is going to look for some data from the U.S. and see whether we are going to keep growing in the U.S. or whether there will be slowdowns driven by Europe or Asia, which will have an impact on issuing activity and demand," he said.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 3:23pm EDT.

SymbolName% changeLast
A-N
Agilent Technologies
-1.26%145.51
B-N
Barnes Group
-0.88%37.15
CM-N
Canadian Imperial Bank of Commerce
+1.3%50.72
CM-T
Canadian Imperial Bank of Commerce
+1.13%68.67
MFC-N
Manulife Financial Corp
+1.34%24.99
MFC-T
Manulife Fin
+1.2%33.83
PSK-T
Prairiesky Royalty Ltd
+2%26.53
RY-N
Royal Bank of Canada
+0.48%100.88
RY-T
Royal Bank of Canada
+0.29%136.62
TRI-N
Thomson Reuters Corp
-0.08%155.83
TRI-T
Thomson Reuters Corp
-0.41%210.8
Y-T
Yellow Pages Ltd
-0.3%9.86

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