J.P. Morgan Chase & Co. Inc. is the top mergers and acquisitions (M&A) firm in Canada through the first half of 2017 in terms of deal value, but RBC Capital Markets leads the way in volume, according to a new report from Mergermarket.
According to the firm’s M&A data for the first half of 2017, J.P. Morgan is the top M&A advisor so far this year, working on $42.9 billion (all figures in U.S. dollars) worth of M&A deals. TD Securities Inc. ranks second at $35.1 billion with Goldman Sachs & Co. third. RBC Capital Markets and Barclays PLC round out the top five.
In terms of number of transactions, RBC Capital Markets leads with 23, followed by TD Securities and Deloitte with 21 deals each, BMO Capital Markets sits fourth with 20 deals, and J.P. Morgan stands fifth.
Overall, continued weakness in commodities prices is weighing on M&A activity in Canada, the report says. Between 2007 and 2014, energy, mining and utilities accounted for an average of 32% of all M&A deals in Canada, but these sectors have only contributed 22% of deals since 2015.
At the same time, this weakness in global commodities prices is weighing on the Canadian dollar, which is boosting inbound deal activity, the report notes. In the first half of 2017, there were 139 inbound deals, worth a combined $16.9 billion, representing record highs.
“What is particularly striking about the increased activity is the departure from the traditional commodities driven sectors, oil and gas in particular, to technology-based deals,” the report says.
Private equity is playing a large part in the shift to more technology sector deals in Canada, the report states, noting that more than a quarter of all inbound software deals in the first half were backed by private equity.
Looking ahead, Mergermarket suggests that it expects to see a rebound in M&A for the mining sector. So far, there have been 24 deals in the sector this year compared with just 38 for all of 2016.
“As the global shift to clean energy continues, there is a concurrent increase in the demand for metals and minerals required to support this transition. Green energy tech such as wind, solar, and storage require substantial quantities of metals and minerals such as copper, gold, lithium, cobalt, which is expected to generate increased activity for these assets,” the report says. “With Canada being home to some of the world’s largest copper reserves, the country is poised for a continued increase in mining M&A.”
At the same time, Canadian miners are also on the lookout for foreign assets, particularly in South America, the report notes: “Countries such as Chile, Peru, and Bolivia should see increased activity over the next few years, and it appears Canadian buyers are already wise to the trend.”
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