GMP Capital Inc., the second-worst Canadian financial stock this year, is the top adviser on equity sales in the country for the first time, tapping its links to the energy industry to oust bigger rival RBC Capital Markets.
GMP Securities managed 38 initial public offerings and secondary stock sales worth $2.52 billion this year, topping BMO Capital Markets and CIBC World Markets by number and value of deals. GMP led more IPOs than all the bank-owned advisers combined.
GMP’s equity financings included Athabasca Oil Sands Corp.’s C$1.35 billion ($1.32 billion) sale, the biggest IPO in Canada in more than a decade. GMP also led IPOs for Tahoe Resources Inc. and Tricon Capital Group Inc., according to data compiled by Bloomberg.
“If you look at the sectors that are firing, even in this economy, it’s the commodity sector, most notably precious and non-precious metals, and oil and gas,” said Harris Fricker, 46, who becomes CEO of Toronto-based GMP on Oct. 1. “We happen to be very adept in both areas,” he said in an interview.
GMP has gained ground with energy offerings after spending two years reorganizing its business under investment banking co-head Dan Tsubouchi, a former oil-and-gas analyst. GMP has about 10 bankers working on Tsubouchi’s team in Calgary, Canada’s energy hub. Before this year, GMP’s best ranking was fourth in 2006, based on Bloomberg data that excludes preferred share sales.
“Athabasca was a home run for them,” said Neil Manji, national IPO services leader for PricewaterhouseCoopers LLP in Toronto.
The top equity ranking hasn’t helped GMP’s stock. The shares have fallen 29 percent since Athabasca began trading in April, to C$10.18 yesterday on the Toronto Stock Exchange. GMP, down 19 percent this year, trails only Manulife Financial Corp. among the worst performers in the 44-company S&P/TSX Financials Index.
Athabasca Oil Sands was Canada’s worst-performing IPO in more than two years after its first month of trading, and has fallen 43 percent from its C$18 IPO price.
Tahoe, a Vancouver-based gold miner, has risen 55 percent since its GMP-led IPO in June, while Tricon, a real estate lender, has slumped 16 percent since it went public in May.
The advisory rankings don’t always boost a bank’s stock because firms often rise and fall quickly, said Robert A. Floyd, lead money manager at R.A. Floyd Capital in Mississauga, Ontario.
“One year may be very robust, another year it may not,” said Floyd, who owns GMP shares. “It’s a good number, but because it’s a volatile number it will not get the multiple that some might think.”
RBC Ranked on Top
Royal Bank of Canada’s RBC Capital Markets was the No. 1 arranger of stock sales during the past four years, and last missed top spot in 2005 when Canadian Imperial Bank of Commerce’s CIBC World Markets ranked first. Kirby Gavelin, head of equity capital markets at RBC Capital, declined to comment.
This year, smaller firms such as GMP and Canaccord Financial Inc. are gaining. Toronto-based Canaccord, which bought Genuity Capital Markets in April, ranks sixth, ahead of bigger rivals Morgan Stanley and Scotia Capital.
“The non-bank firms have become more aggressive,” Manji said. “We’re definitely seeing them more in the marketplace.”
Canada’s bank-owned firms have struggled to take some companies public after stocks declined earlier this year, Manji said.
Can’t Close Deals
Publisher Lulu Ltd. postponed its planned C$55 million IPO in April that was led by CIBC and Genuity. RBC Capital couldn’t take airline Porter Aviation Holdings Inc. public in its proposed C$120-million IPO in June. Canada has had at least nine IPOs postponed or withdrawn since January.
“The banks have lots in the pipeline, but they just haven’t been able to execute and close deals,” Manji said. “They want to make sure they’re not on the wrong side of a failed deal.”
Companies sold $17.8 billion worth of equity in Canada this year, down 12 percent from the same period a year ago, according to Bloomberg data. The amount raised through IPOs was $4.56 billion, the most since 2006.
“It’s great news that we’re on that rebound,” Manji said. “We’d like to see more of those C$200 million to C$300 million-sized deals, which would really tell us that we’ve got a lot of activity.”