BMO Capital Advances on RBC for Canadian Stock Sales, Mergers

Bank of Montreal CEO William Downe
Bank of Montreal Chief Executive Officer William Downe said, “Since last year, BMO Capital Markets has made strategic hires across the business globally.” Photographer: Norm Betts/Bloomberg

BMO Capital Markets climbed the ranks for advising on mergers and arranging stock sales last year, challenging RBC Capital Markets among Canadian banks.

Bank of Montreal’s investment-banking unit was the No. 3 adviser on mergers and acquisitions involving Canadian companies after Morgan Stanley and RBC Capital Markets, rising nine spots for its first top-five ranking in nine years. BMO Capital Markets also rose to second place for Canadian equity financings, its best result since 2007.

BMO Capital Markets added investment bankers in Melbourne, Beijing and Mumbai while expanding in the U.S. in the last two years to increase its flow of deals, said William Butt, head of global investment & corporate banking. The Toronto-based firm hired about 450 traders, analysts and investment bankers worldwide in the past year, including 190 in the U.S.

“We have dramatically built our business outside of Canada, both in the United States and outside of North America to further extend our industry expertise and access to investors,” Butt, 48, said. “There’s been a huge push into the United States with two areas of focus: old investment-banking know-how and industry expertise, while building securities distribution capability.”

Canadian companies were involved in 2,078 announced takeovers valued at $166.6 billion in 2010, the most since the record $332.4 billion in 2007, according to data compiled by Bloomberg. The figures are current as of yesterday and subject to change as more deals are recorded.

Tomkins Bid

Morgan Stanley dislodged RBC Capital Markets from top spot for takeovers last year, after helping arrange 23 deals worth $33.1 billion. RBC Capital Markets ranked second, with 54 takeovers valued at $31.2 billion, including advising Onex Corp. and Canada Pension Plan Investment Board on the $4.77 billion takeover of U.K. manufacturer Tomkins Plc.

BMO Capital Markets was third with $31.1 billion in 45 deals, followed by Goldman Sachs Group Inc. and TD Securities.

The last time BMO placed in the top five was 2001, when it ranked fifth. In 2009, BMO was 12th. The bank advised Kinross Gold Corp. for its $6.7 billion takeover of Red Back Mining Ltd., Canada’s largest completed takeover in 2010.

Bank of Montreal Chief Executive Officer William Downe said in a Dec. 7 conference call that his bank continues to build on its capital markets business by adding staff.

“Since last year, BMO Capital Markets has made strategic hires across the business globally,” Downe, 58, said. “And as these additions gain traction, we expect to see returns.”

Wisconsin Bank

BMO Capital Markets was helped by its parent, which announced a $4 billion takeover of Wisconsin lender Marshall & Ilsley Corp. on Dec. 17, the bank’s largest deal. Morgan Stanley helped advise Marshall & Ilsley.

RBC Capital Markets parlayed its investment-banking expertise outside the country to win international assignments while maintaining its dominance in Canada.

“We’ve continued to add very capable bankers in industry sectors in the U.S., and in the U.K. we’ve embarked on a similar program,” said Doug Guzman, 45, head of global investment banking at RBC Capital Markets in Toronto. “It’s a program of more bankers, better bankers and broader swaths of the economy covered.”

Initial public offerings, secondary stock sales and equity-linked deals in Canada slid 14 percent to $35.6 billion from the $41.5 billion raised a year earlier, according to Bloomberg data. Companies raised $6.13 billion in IPOs in Canada last year, three times more than in 2009 and the highest since $6.32 billion was sold in 2006.

Whistler IPO

Royal Bank of Canada’s investment bank retained its top ranking for Canadian stock sales for a fifth straight year, leading 56 issues valued at $3.9 billion. RBC Capital Markets helped arrange secondary stock sales for Husky Energy Inc. and Trican Well Service Ltd., and IPOs for Whistler Blackcomb Holdings Inc. and Smart Technologies Inc.

BMO Capital Markets, which ranked fifth in 2009, arranged 55 deals worth $3.79 billion, mostly in the oil-and-gas and mining industries. BMO trailed RBC by about $107 million. The firm helped arrange the C$700 million ($704 million) IPO of Calgary-based MEG Energy Corp. in July, Canada’s second-biggest IPO, and share sales for Crescent Point Energy Corp. and Detour Gold Corp.

“We’re in a market where the resource side has done well and we’re extremely well-positioned to benefit from it,” said Peter Myers, 51, BMO’S head of investment & corporate banking in Canada. “What you’re seeing now is the fruition of a lot of work that’s gone on over many years.”

GMP Securities ranked third for Canadian equity financings, followed by CIBC World Markets and TD Securities. Bank of Montreal is Canada’s fifth-largest bank, while Royal Bank is the largest.

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