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By Euan Rocha and John Tilak
TORONTO, July 2 (Reuters) - Royal Bank of Canada andBank of Montreal were the top two advisers on CanadianM&A deals in the first half of 2015, a period during which theoverall dollar value of deals surged despite a decline in theactual number of transactions.
Thomson Reuters data released on Thursday showed $122billion in merger and acquisition deals in Canada in the firsthalf, up 35 percent from the year-before period and topped onlyby the record first half of 2007. The number of deals dropped 13percent, however.
"We've got empirical data supporting the fact thatinvestors are currently rewarding companies that are going outand doing big deals," said Grant Kernaghan, Citigroup's managingdirector of Canadian investment banking.
RBC and BMO snagged the No. 1 and No. 2 rankings by value,respectively, largely on the back of a single large intercompanydeal: Enbridge's transfer of some of its Canadianpipeline and renewable energy assets to Enbridge Income Fund. Including debt, that deal was worth $24.2 billion.
Major global investment banks, which advised on the bulk oflarge cross-border deals, dominated the rest of the leaguetables. JPMorgan, Citigroup, Barclays,Deutsche Bank, Credit Suisse, MorganStanley and Bank of America all ranked high afteradvising on various sides of the GE Capital asset sales processas well as on Hudson's Bay Co's acquisition of Germandepartment store chain Kaufhof and other deals.
"The overarching theme we see is that the level ofcross-border M&A activity is only going one way, and that's up,"said Bruce Rothney, chief executive of Barclays Canada.
"We're living in a slower growth environment. Everyone'slooking for organic growth where they can, but in a world wherecost structure starts to take on increased importance, scale isgoing to be important and that'll drive more M&A."
Others agreed the current environment is spurring largerdeals.
"There's more confidence in management suites and boardroomsthat the recovery is more sustained," said Dougal Macdonald,head of Morgan Stanley Canada. "Nonetheless, because it's lowgrowth, M&A has become a tool for companies to enhance growthand the markets are supportive and rewarding strategically andfinancially compelling M&A."
Bankers said another factor driving deals has been thehealth of equity markets.
"Strong equity markets have given clients confidence thatthey can finance deals, and the equity issuance pipeline hasbeen very robust," said David Rawlings, CEO of JPMorgan Canada.
(Reporting by Euan Rocha and John Tilak; Editing by PeterGalloway)
