Barrick Leads Year of Multibillion Dollar Stock Sales

Barrick Gold Corp. (ABX)’s $3 billion share sale led the biggest year of equity financings exceeding $1 billion since 2009, with offerings to fund drug, grocery and power takeovers accounting for a quarter of Canadian deals.

Stock sales rose 7.4 percent in 2013, with Royal Bank of Canada’s RBC Capital Markets taking top spot for the second straight year after arranging 59 deals that raised $5.21 billion, according to data compiled by Bloomberg. Bank of Montreal’s BMO Capital Markets ranked No. 2 for a second year, with 38 sales for $4.58 billion, and Toronto-Dominion Bank (TD)’s TD Securities unit again was third, with 31 deals for $3.17 billion. Bank of Nova Scotia (BNS) was fourth and Canadian Imperial Bank of Commerce was fifth.

“It was a very active year across a range of industries that were a little different than what we’ve seen over the last few years,” Kirby Gavelin, head of equity capital markets at RBC Capital Markets, said in an interview from Toronto, where Royal Bank, Canada’s second-largest lender by assets, is based. “We didn’t see the mining and energy domination, but we saw greater strength in the diversified sectors.”

Investment banks arranged $32.6 billion from initial public offerings, secondary sales and convertible debentures in Canada last year, compared with $30.3 billion in 2012, Bloomberg data show. The figures and rankings, which exclude preferred share sales and self-led deals, are current as of yesterday and are subject to change as more transactions are recorded.

Photographer: Patrick Doyle/Bloomberg

The Canadian economy will grow 2.3 percent this year, up from a 1.7 percent growth rate in the prior two years, according to the median estimate of analysts surveyed by Bloomberg. Close

The Canadian economy will grow 2.3 percent this year, up from a 1.7 percent growth rate... Read More

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Photographer: Patrick Doyle/Bloomberg

The Canadian economy will grow 2.3 percent this year, up from a 1.7 percent growth rate in the prior two years, according to the median estimate of analysts surveyed by Bloomberg.

Takeover Funding

Four deals accounted for more than a quarter of the 2013 total, including Barrick’s October share sale to help the Toronto-based gold miner pay down debt. Last year had the most equity financings of more than $1 billion since eight such large deals helped push stock sales to a record $44.1 billion in 2009, according to Bloomberg data. In comparison, 2012 had one sale exceeding $1 billion, 2011 had three large deals and 2010 had one.

“The Canadian market is one that over a lengthy period of time has been highlighted by large transactions from year to year,” said Gavelin, whose firm led the Barrick deal with Barclays Plc and GMP Capital Inc. “The $3 billion Barrick transaction was certainly a milestone transaction in the mining sector.”

The three other large deals helped pay for acquisitions. Valeant Pharmaceuticals International Inc.’s (VRX) $2.3 billion equity sale in June helped fund its takeover of Bausch & Lomb Holdings Inc., Empire Co.’s C$1.84 billion ($1.73 billion) offering of subscription receipts helped pay for its purchase of Safeway Inc.’s Canadian stores, and Fortis Inc.’s C$1.59 billion debenture sale last month went toward its purchase of Tucson, Arizona-based UNS Energy Corp.

Deal Financing

Bankers anticipate an increase in equity financings this year, with transactions across a range of industries including consumer, industrial, real estate and mining if commodity prices perk up. Acquisitions may fuel stock sales, as companies seek financing to pay for deals.

“Mining and energy have been very, very quiet in the past year, for a variety of reasons, but we do expect that mining will be somewhat busier,” said Peter Miller, head of equity capital markets in Canada at BMO Capital Markets. “There are some high-quality development companies that are hitting the stage where they could raise capital, they have a strong shareholder base that will support them raising capital.”

Canada’s benchmark Standard & Poor’s/TSX Composite Index (SPX) rose 9.6 percent last year, lagging the 30 percent gain of the S&P 500 Index. (SPTSX)

Economic Growth

The Canadian economy will grow 2.3 percent this year, up from a 1.7 percent growth rate in the prior two years, according to the median estimate of analysts surveyed by Bloomberg. By comparison, the U.S. is forecast to grow 2.6 percent in 2014.

Scotiabank, which led banks on the Fortis deal, expects an “active” first quarter, with some deals tied to acquisition funding and asset purchases in the early part of the year, according to Lawrence Lewis, head of equity capital markets at the Toronto-based firm.

“It was a decent fourth quarter for issuance in the oil-and-gas sector after a relatively quiet first three quarters,” Lewis said in an interview. “There’ll be some more oil-and-gas activity that will continue to carry through.”

Companies raised $2.96 billion in Canadian IPOs, up 11 percent from 2012, though just half of the amount raised in 2005 and 2006, according to Bloomberg data.

REIT Deals

Real estate investment trusts dominated the largest deals, with offerings for high-yielding securities of Canadian Tire Corp.’s CT REIT, Loblaw Cos.’ Choice Properties REIT, Milestone Apartments REIT and seven others collectively raising $1.52 billion, according to data compiled by Bloomberg.

Other IPOs last year included snowmobile-maker BRP Inc., Oryx Petroleum Corp., Saskatchewan’s registry operator Information Services Corp., and Halogen Software Inc. (HGN), an Ottawa-based technology company.

“We’ve started to see investor demand for industrials, consumer stocks and technology stocks pick up, and as a result that will drive new issue activity,” said Sante Corona, head of equity capital markets for TD Securities. “IPOs in those sectors will pick up in 2014.”

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; Peter Eichenbaum at peichenbaum@bloomberg.net

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