National Post (Latest Edition)

Goldman hangs on as top Canadian adviser in slow year for deal flow

Part of two dozen transactio­ns worth US$204B

- Kevin Orland

Goldman Sachs Group Inc. held on as the top adviser for mergers and acquisitio­ns in Canada for the third straight year, making the most of a sluggish time for dealmaking.

Goldman advised on 24 announced deals involving Canadian companies with a combined value of US$ 50 billion, according to 2020 data compiled by Bloomberg. The total value of all Canadian acquisitio­ns announced was US$ 204.2 billion, the lowest since 2013. The rankings and data are as of Dec. 31 and may change as more deals are recorded. Goldman was last year’s top M& A adviser globally as well.

While COVID-19 broke or delayed many transactio­ns that had been in the works around the world, activity has since returned to more normal levels. But the recovery has been slower in Canada, partly due to the country’s prepondera­nce of resource companies, which require in- person site visits and due diligence prevented by travel restrictio­ns and social distancing, said Luke Gordon, head of Canadian M&A for Goldman Sachs.

The deals that were struck have been helped by the flood of liquidity pumped into the market by central banks, which has pushed buyers’ cost of capital down to historical­ly low levels, supporting higher valuations, Gordon said in an interview.

“The concentric circles of buyer willingnes­s to pay and seller expectatio­ns are overlappin­g in a way that they don’t always do,” he said.

Goldman’s lead on the league table was bolstered by large transactio­ns that involved non- Canadian companies. Those included Intact Financial Corp.’s US$ 9.4- billion takeover of London- based RSA Insurance Group PLC’S Canadian, U.K. and internatio­nal operations, and New York- based Insight Partners’ US$ 5- billion acquisitio­n of Switzerlan­d’s Veeam Software from a consortium led by Canada Pension Plan Investment Board.

“One of the trends that we’re seeing in Canada is a great proportion of cross- border deals,” Gordon said. “That plays to our strengths.”

Following Goldman were Morgan Stanley, with 24 deals valued at US$ 45.4 billion, and Bank of America Corp., with 19 deals valued at US$38.8 billion.

Canadian Imperial Bank of Commerce came in fifth, its highest ranking since 2011, with 27 deals valued at US$29.6 billion.

Notable acquisitio­ns the firm advised on include the Intact- RSA deal, Northview Apartment Real Estate Investment Trust’s $ 2.32- billion sale to a group led by Kingsett Capital Inc., and Cenovus Energy Inc.’s allstock acquisitio­n of Husky Energy Inc., which was valued at about US$ 2.9 billion when it was announced in October.

The rebound in CIBC’S league- table standing is the result of six years of work to build experience and continuity in the investment- banking unit, and to provide a consistent team of bankers that clients can turn to when considerin­g an acquisitio­n, said Roman Dubczak, head of global investment banking. This year may see heightened M&A activity in asset- intensive sectors such as natural resources, real estate and renewable energy, he said in an interview.

“The renewable- energy sector is one where there’s quite a bit of expansion and consolidat­ion going on,” Dubczak said.

The broader merger market should be strong as well, both in industries performing well and those facing challenges and turning to deals to enhance their scale, according to Mike Boyd, CIBC’S head of global M&A. Underpinni­ng all that activity will be a solid economic rebound, he said in an interview.

“As the progress kicks in with respect to the vaccine, and as things normalize, particular­ly as we get toward the back half of the year, we should see a very strong economy,” Boyd said. “That’s going to help propel M& A activity.”

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