Toronto-Dominion Tops Canadian Stock Sales for First Time on Real Estate

TD Securities was the top arranger of Canadian stock sales for the first time in 2011, as the unit of Toronto-Dominion Bank (TD) helped oversee some of the country’s largest real estate and mining deals.

TD Securities helped lead 53 issues valued at $4.93 billion, according to data compiled by Bloomberg. The company was fifth in the 2010 ranking, with 41 sales valued at $2.62 billion. The figures are current as of yesterday and subject to change as more deals are recorded.

The Toronto-based investment bank said it tapped into investors’ need for high-yield stocks while renewing its investment in energy. TD helped arrange a $993 million sale for Intact Financial Corp. (IFC) and led a C$410 million ($405 million) initial public offering for Dundee International Real Estate Investment Trust (DI-U), Canada’s third-biggest IPO of the year.

“The new issue market has been all about yield,” said Sante Corona, 45, head of equity capital markets at Toronto- based TD Securities, a unit of Canada’s second-biggest bank. “The yield theme was a big driver (last) year, and it will continue to be a big driver again looking into 2012.”

Sales this year will probably be “in the same strike zone” as the $31.5 billion raised last year in IPOs, secondary sales, and convertible bonds, said Patrick Meneley, TD Securities’ head of global investment banking. The figures exclude preferred shares and so called “self-led” deals for the banks’ parent companies.

“We feel pretty optimistic about the level of activity we can expect in the year ahead,” Meneley said. “That’s all dependent upon people in the market having some stability, having a view that global macro forces are going to be supportive of a decent economy and a constructive rate environment.”

Issuance Down

Overall issuance was down 12 percent last year, the second consecutive annual decline, from a peak of $41 billion in 2009, according to Bloomberg data.

“There is a question of confidence,” said Darryl White, 40, global head of equity capital markets at Bank of Montreal (BMO)’s BMO Capital Markets. “Issuers are learning how to do deals in volatile markets, and are accepting of the fact that it’s the new normal.”

RBC Capital Markets, the investment-banking unit of Toronto-based Royal Bank of Canada (RY), ranked second for stock sales last year, followed by BMO Capital, CIBC World Markets and Scotia Capital. RBC, which arranged seven more deals than TD in 2011, has been the No. 1 ranked underwriter five times in the past decade, and led in 2010 and 2009.

‘Active Year’

“It was an active year,” Kirby Gavelin, 53, RBC’s co-head of global equity capital markets, said in a telephone interview. “Certainly there were periods over the course of the year that were slower than others; there was some caution in the marketplace that wasn’t constructive for strong new issue activity.”

Husky Energy Inc. (HSE), the Calgary-based energy company, had the largest transaction last year, raising $1.03 billion in a secondary sale led by Goldman Sachs Group Inc. with three other banks. Intact Financial, Canada’s largest property and casualty insurer, had the second-biggest deal, to help fund its C$2.6 billion takeover of Axa SA’s Canadian business.

Companies raised $2.56 billion in IPOs in 2011, according to Bloomberg data. That’s down 58 percent from $6.14 billion in 2010.

“It’s not easy to call but nor do we think it’s a market that will shut down as it did in 2008 where it was just very difficult to get anything done as far as IPOs are concerned,” BMO’s White said.

Gibson, Dundee

Gibson Energy Inc. (GEI), the oil-services firm owned by investment funds linked to Riverstone Holdings LLC, had the biggest IPO, raising C$500 million in June. The stock rose 19 percent by year-end. Parallel Energy Trust was the second- biggest, after closing its C$342 million sale in April. Parallel fell 18 percent in 2011.

Some deals were postponed last year, including Renaissance Lifestyle Communities Inc.’s C$260 million sale in November and the C$375 million sale for North American Oil Trust in December.

“There is a decent backlog of IPOs waiting for better market tone,” TD’s Corona said. “IPO activity in 2012 will be driven by how markets do.”

TD Securities has bulked up operations in the last couple of years in its energy business, including research capabilities. It’s part of a plan that began in March 2005, when Chief Executive Officer Edmund Clark declared that TD Securities would become a top-three investment bank within five years.

“In my mind, it’s an integrated message; it’s linked to all parts of the firm,” Robert Dorrance, 58, the bank’s group head of wholesale banking, said in an interview. “Five years ago, our commitment was to be a top-three dealer and we’re executing on that.”

To contact the reporters on this story: Sean B. Pasternak in Toronto at spasternak@bloomberg.net; Doug Alexander in Toronto at dalexander3@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; David Scheer at dscheer@bloomberg.net

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