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Toronto - Royal Bank of Canada was the top investment-banking adviser on Canadian deals for the second straight year as mergers surged to a five-year high, led by energy.
Bank of Montreal's BMO Capital Markets unit rose to the second spot, while Goldman Sachs was third, data compiled by Bloomberg show. Toronto-Dominion Bank's TD Securities unit was fourth, while Bank of America Corp.'s Merrill Lynch unit was fifth. Bankers say they expect more transactions next year.
"We are, based on what we see today, cautiously optimistic that the level of activity for 2013 will be better than 2012," Goldman Sachs Canada Chief Executive Officer John P. Curtin Jr. said in an interview from Toronto.
Canada's economic stability, improvements in the U.S. economy and a return of confidence to global markets may fuel more takeovers in 2013. Mining and energy will drive deals next year, while areas such as real estate will continue to be busy, according to investment bankers. anadian companies were involved in 2,359 announced deals valued at $213.4 billion in 2012, up 17 percent from $182.8 billion in 2011 and the highest year since 2007, according to Bloomberg data.
The figures and rankings are as of Dec. 28 and subject to change as more deals are recorded.
Royal Bank's RBC Capital Markets unit worked on 102 acquisitions valued at $69.6 billion in 2012, including advising Nexen Inc. on its $15.1 billion sale to Cnooc Ltd. of China and Glencore International Plc's C$6.1 billion ($6.13 billion) offer for Viterra Inc., according to Bloomberg data.
"We were fortunate we were on the two largest deals," Peter Buzzi, co-head of mergers and acquisitions at RBC Capital Markets, said in an interview in Toronto. "If you weren't on the Nexen deal it's virtually impossible to be top of the league tables."
Canada's largest transaction in 2012 was Cnooc's bid for Nexen, which received Canadian government approval on Dec. 7. Glencore's takeover of Viterra, Canada's largest grain handler, was the second-largest acquisition.
"Nexen was a long-standing relationship; we've done a lot of work with the company over the years," Buzzi, 52, said. "The relationship we have with Glencore is more recent, and it's really a function of our growth outside Canada."
Other large deals included the C$5.2 billion bid for Calgary-based Progress Energy Resources Corp. by Petroliam Nasional of Kuala Lumpur, which also received Canadian government approval Dec. 7. BMO Capital Markets advised Progress, helping the Toronto-based firm land a top-three standing for a second year with 57 deals valued at $47.7 billion.
"This is an evolution for us," Darryl White, BMO Capital Markets' head of global investment and corporate banking, said in an interview from Toronto. "If you were to go back five or 10 years, in all candor, you'd find that our franchise was underrepresented as far as the largest deals were concerned."
Goldman Sachs, which ranked fifth last year, reclaimed a top-three spot for the first time since topping Canadian rankings in 2010. The New York-based firm worked on 23 deals valued at $46.8 billion, advising companies including Calgary- based Nexen, CGI Group Inc. and First Quantum Minerals Ltd.
"On balance we are pleased with our improved positioning and we are proud of the effort our team put forth," Curtin, 62, said. "We would not have our success in Canada without the broad support and involvement of our colleagues around the world."
In 2011, RBC ranked No. 1 after advising on $36.3 billion in deals, edging ahead of Canadian Imperial Bank of Commerce, with C$36.1 billion of takeovers. BMO Capital Markets was third, with $34.8 billion.
Next year will see a stronger market for takeovers in Canada as the economy improves, aided by a U.S. recovery and a stronger China, according to Mike Boyd, head of global mergers and acquisitions at Toronto-based CIBC. The U.S. economy is forecast to grow 2 percent next year, with Canada growth estimated at 1.8 percent, based on Bloomberg surveys.
"I do think M&A in the mining sector will rebound in 2013, with a stronger economic outlook, and we'll continue to see a fair bit of activity in the oil-and-gas sector," said Boyd, whose firm ranked seventh with $25 billion of deals. "We saw much stronger activity in 2012 than we had in previous years in energy, and that's a trend we'll see continue in 2013."
The Canadian government's clarification of Investment Canada rules on foreign takeovers, as well as its position on state-owned enterprises owning Alberta's oil-sands companies may change how deals are done, according to Boyd.
"In the oil-sands we will see more joint ventures, minority investments and those kinds of things, but I don't think it will have a significant impact on overall M&A activity," Boyd said.
Canadian acquisitions in 2012 weren't limited to the country's resources. Banks were active, with Royal Bank, Canada's largest lender by assets, agreeing on Oct. 23 to buy Ally Financial Inc.'s Canadian auto-finance and deposit business in a $4.1 billion deal. Bank of Nova Scotia, the third-largest lender, offered in August to buy the Canadian banking operations of ING Groep for C$3.13 billion.
Quebec companies were also busy. BCE Inc., Canada's largest telecommunications company, offered to buy Astral Media Inc. in a C$3.38 billion takeover amended in November to address concerns by the country's broadcast regulator on competition and ownership concentration in television and radio. Alimentation Couche Tarde Inc. of Laval, Quebec, bought Statoil Fuel & Retail, Scandinavia's biggest gas-station operator, in a $2.6 billion takeover. Montreal-based CGI Group spent $2.7 billion in August to buy U.K. computer-services provider Logica Plc.
RBC also topped the rankings based on the number of deals, ahead of the 57 transactions by second-place BMO Capital Markets. TD Securities was third with 40 deals, followed by CIBC with 33 and Scotiabank with 30 deals.
RBC's Buzzi credits his firm's relationships with Canadian companies and its global platform for its top ranking.
"That's what we put forward as our competitive advantage and every year we hope that results in us being No. 1 in the league tables," he said.