New equity issuance is up sharply in Canada this year. Just over $11-billion in new shares have been sold so far this year, according to data from Thomson Reuters. That compares to $6.6-billion in 2014 and $5.2-billion in 2013 during the comparable time frame.
Part of the reason for the uptick is the collapse in the price of oil, which is forcing some of the major energy companies to issue new stock to shore up their balance sheets. Cenovus Energy Inc. and Encana Corp. have tapped investors to the tune of $1.5-billion and $1.2-billion respectively this year. Both were structured as bought deals, meaning the investment banks leading the issues bought the shares and then attempted to flip them to third-party investors. The Encana share sale was done and dusted quickly, but investment bankers had a tougher time convincing investors to take Cenovus shares off their hands, according to sources that The Globe and Mail talked to in the aftermath.
The year's third-biggest deal by value, Silver Wheaton Corp.'s $800-million bought deal, announced on March 2, was troublesome from the get-go. Bankers had a hard time moving the shares overnight and the next day the stock dipped below the bought deal price of $20.55 (U.S.) a share, leaving them holding large quantities of unsold shares, according to people close to the deal.
The fourth-biggest deal of 2015 was Bombardier Inc.'s $750-million (Canadian) bought deal announced on Feb. 19, which was a roaring success. Sources told my colleague Tim Kiladze that the stock was scooped up quickly.
RBC Dominion Securities has made more on fees that any other investment bank in equity sales this year, taking in $63-million, according to Thomson Reuters. RBC co-led the Cenovus and Encana deals. Scotia Capital is in second place, pocketing just a smidgen under $50-million, a chunk of that coming from the Silver Wheaton deal, in which it was the lead banker.
Canaccord Genuity Corp. is in the highest place among the independents, taking in $20.5-million in fees from equity sales this year. Last year, the company took in about $60-million in fees related to the online gambling space and that trend is continuing in 2015. Canaccord was the lead on Intertain Group Ltd.'s $420-million bought deal announced on Feb. 5 as part of its acquisition of assets from Gamesys Ltd.