Scotiabank leads in quarterly Canadian M&A as resources rebound

By Cameron French and Euan Rocha

TORONTO (Reuters) - Bank of Nova Scotia (Toronto:BNS.TO - News) led investment banks in advising on mergers and acquisitions in Canada and finished second in equity issues in a first quarter that brought a rebound in overall activity in both categories after a weaker 2013.

Driven by brisker activity in the energy and mining sectors, the total value of M&A deals in the quarter rose by 20 percent to US$35.7 billion from the first quarter of 2013, according to data released by Thomson Reuters on Thursday.

Equity advisory totals rose 36 percent to C$8.3 billion ($7.52 billion).

"I think the story so far ... year to date is just the real change in activity in Calgary, or in energy broadly," Dan Barclay, head of M&A at Bank of Montreal's BMO Capital Markets, told Reuters, referring the city where Canada's energy industry is centered.

BMO (Toronto:BMO.TO - News) finished second in M&A advising and third in equity issuance.

Energy deals such as Canadian Natural Resources Ltd's (Toronto:CNQ.TO - News) $2.8 billion purchase of the bulk of Devon Energy Corp's (TSXV:DVN.V - News) Canadian oil and gas properties, and Baytex Energy Corp's (Toronto:BTE.TO - News) $2.2 billion purchase of Australia's Aurora Oil & Gas Ltd (ASX:AUT.AX - News) were among oil and gas deals that led activity during the quarter.

Activity in Canada's energy industry has slowed since the Canadian government restricted investment in the country's oil sands patch by state-owned enterprises in late 2012.

During the most recent quarter, Canadian companies led many large deals, and Barclay expects more activity, helped by energy share prices that have swung higher of late.

"When I look forward in the pipeline, I think it's going to be very busy in energy over the next few quarters for sure," he said.

"Some of it is just changing commodity prices, some of it is pent up demand ... part of it is availability of capital."

Equity issues were dominated by two large deals: Baytex's C$1.5 billion bought deal to help finance its Aurora acquisition, and a C$2.6 billion offering by copper miner Turquoise Hill Resources (Toronto:TRQ.TO - News).

All told, more than 630 acquisitions and nearly 180 equity deals were counted in the quarter in Canada, according to Thomson Reuters league tables data for the first quarter of 2014.

While BMO has been at or near the top of the equity rankings over the last two years, Scotiabank's rise in both equity and M&A is significant for a player not typically among the leaders.

All told, Scotiabank advised on eight M&A deals for a 26.3 percent market share, and nine equity issues for a 13.8 percent share during the quarter, finishing second to RBC Capital Markets (Toronto:RY.TO - News) on the equity side.

Adam Waterous, head of global investment banking at Scotiabank, said the bank has been working to increase its market share over the past year or so, taking advantage of a retreat by some competitors during the energy and mining slump.

"The easiest time to pick up market share is in the down market," Waterous said in an interview. "So when ultimately the markets do turn -- and the markets have turned for both oil and gas and mining in the last quarter -- we're well positioned to reap the benefits."

He said the oil and gas recovery is about three months ahead of the mining recovery, and expects energy deals to continue to be strong through the year.

RBC led in debt issuance, advising on C$9.0 billion worth of deals out of a total of C$38.9 billion.

The top law firm advising on M&A deals was Osler Hoskin & Harcourt, which guided $6.2 billion in deals. ($1 = 1.1038 Canadian Dollars)

(Reporting by Cameron French; Editing by David Gregorio)