The slow summer months can make the third quarter a tough period, but Canadian legal firms saw quite a spike of activity in September.
Deal flow was down year over year, but deal values rose significantly. Some 37 firms represented issuers on 115 debt and equity deals that raised a total of $24-billion in public markets in the third quarter, compared with the 50 firms that worked on 123 deals worth a combined $17.4-billion in the same period last year.
The question for firms is whether the third-quarter momentum will continue for the balance of the year. We?re already one month into the final quarter, and it looks like the September surge has slowed.
?It does seem that the market is softer,? says Karrin Powys-Lybbe, co-head of the corporate and capital markets practice at Torys LLP. The firm placed first in our ranking of underwriter advisors on equity deals. ?It?s a little early to tell. We may get a rebound before the year end.?
Jonathan Grant, a partner in the Toronto office of McCarthy T?trault LLP, says the third quarter?s activity might have been impacted by some unique market conditions. ?We?re generally finding that issuers have taken advantage of the debt markets where they can and have topped up their funding. So the expectation is that that segment of the market may not be as robust for that reason over the next little while.?
Back to the third-quarter results. Energy and real estate were particularly active, but it was the banks that came to the market with some blockbuster offerings.
Bank of Nova Scotia raised $1.7-billion in common shares ? the biggest equity deal of the quarter ? and another $1.5-billion in debentures to finance its $3.2-billion purchase of ING Direct. Osler, Hoskin & Harcourt LLP advised the issuer and Torys advised the underwriter. Norton Rose Canada LLP advised issuer Royal Bank of Canada on the largest single deal of the quarter, a $2.4-billion cross-border bond offering.
Norton Rose Canada?s work on the RBC deal and several notable energy matters puts the firm in the top spot in our marquis table, Canadian legal counsel to the issuers on combined debt and equity offerings. Norton Rose also topped our table for legal advisors to issuers on debt offerings.
Bob Engbloom, deputy chairman of Norton Rose Canada, says the firm?s strong performance reflects the recent fusion with Macleod Dixon LLP. ?This is exactly why we came together,? Mr. Engbloom says. ?We wanted to do this merger so we could blend the strength of the two legacy firms across the country.?
Norton Rose Canada worked on five deals for issuers worth a combined $4.84-billion, followed by Osler (eight deals, $4.18-billion), McCarthy T?trault (10 deals, $3.09-billion), Torys (eight deals, $1.96-billion) and McMillan LLP (four deals, $1.8-billion).
Desmond Lee, a partner in the Toronto office of Osler, says while the market is choppy, foreign investors continue to look at Canada as a great place to raise capital. Osler topped our table for advisors to equity issuers.?We?re tailor-made for certain types of businesses, because of our market size, because of our coverage of natural resources and because of the strength of our economy.?
Deal flow is an excellent measure of a law firm?s strength as it reveals a firm?s ability to generate consistent business. As is often the case, Stikeman Elliott LLP led the pack, advising issuers on 11 debt and equity matters, followed by McCarthy (10 deals) and Osler and Torys (eight deals each).
?Achieving consistency in such an inconsistent market is comforting, but we do not take it for granted.?We are not a ?rest-on-our-laurels? type of shop,? says Jeffrey Singer, a partner in the Toronto office of Stikeman.
Blake, Cassels & Graydon LLP topped our table for underwriters on debt and equity deals combined, working on 17 deals worth $5.08-billion, followed by Torys (13 deals, $4.26-billion), Goodmans LLP (seven deals, $2.61-billion), Fraser Milner Casgrain LLP (seven deals, $1.46-billion) and Davies Ward Phillips & Vineberg LLP (five deals, $1.25-billion).
Blakes also appears at the top of our table for advisors to debt underwriters. The firm seeks to balance its work for both issuers and underwriters, but it can be easier to secure underwriting mandates. Canada has a limited number of big securities underwriters, and the nature of their work has them steadily active in capital markets, says David Toswell, a partner in the firm?s Toronto office. ?You really pursue both sides of the equation, but the reality is that underwriter work is more frequent as it?s more readily accessible.?
Financial Post
dhasselback@nationalpost.com
An earlier version of this story mixed up the debt issuer and underwriter tables. Legal Post apologizes for that.
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