Canadians urged to take risks as equity deals hit 23-year low
Investment bankers are urging Toronto-listed companies to buy a business or raise some money as deal volumes in Canada have fallen to their lowest levels in 23 years.
Equity and equity-linked offerings in Canada fell for the third straight year to hit their lowest point since 2001, according to league tables compiled by Bloomberg. There were 236 deals in 2024, raising $17.2 billion, compared with $19.8 billion in 2023.
The activity stands in sharp contrast to the United States, where such offerings have climbed for the third straight year, data compiled by Bloomberg show.
“We need corporate Canada to become greater risk takers,” said Peter Miller, head of equity capital markets at Bank of Montreal (BMO) Capital Markets in Toronto. “We just need corporate Canada to, you know, want to take some risks, strap on some capital projects and do more mergers and acquisitions to fuel growth.”
Miller said that while the number of deals dropped in 2024, the proportion of so-called clean deals rose, indicating investors have appetite for more. The problem is not demand but supply, he said.
In a clean deal, banks are able to smoothly sell securities of a transaction they underwrote, whereas in a hung deal they may need to offer deeper discounts or risk being stuck with unsold inventory.
“I think that every deal that we’ve done this year has been a green shoot,” said Nitin Babbar, Royal Bank of Canada (RBC) Capital Markets global co-head of equity capital markets, adding that investors are looking to buy into stock offerings for companies looking to grow. “Every deal that’s come has been very, very well received.”
RBC Capital Markets topped Canadian equity and equity-linked league tables this year with mandates to raised $2.8 billion
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