BMO Says Worst of Canada Equity Issue Slump Is Over

“From what we’re seeing, the worst is behind us — and that was probably last year,” Peter Miller, head of equity capital markets for BMO Capital Markets, said in an interview with Bloomberg News. “But we’re certainly not, from our perspective, on a steep incline in new issue activity.”

Ailing stock prices and rocky economic conditions have stunted new deals in the country, with potential issuers reluctant to dilute shares by selling new stock at lower prices without a pressing need. But Canadian pipeline operator Enbridge Inc.’s C$4.6 billion ($3.4 billion) jumbo share sale last month — and a slew of recent deals on US exchanges — have raised hopes of a global rebound.

Within about a week of Labor Day, BMO worked on three offerings across a diverse mix of industries, according to Miller. All three were oversubscribed and traded well in the secondary market, he said, noting the demand from investors is strong.

But the banker cautioned against expectations for a flurry of ensuing deals. That trio alone has added a significant amount to the volume of BMO’s new issues so far this year, underscoring how quiet 2023 had been until that point. Plus, businesses considering initial public offerings in Canada are likely holding off as they recall the sky-high valuations of 2021, he said.

“I don’t think it’s the tip of an iceberg or that there’s this massive wave of issuance to come,” Miller said.

So far this year, BMO has handled issues worth C$2.3 billion and sits atop a Bloomberg ranking of equity and equity-linked offerings in Canada.

Those included Enbridge’s share sale, where it acted as joint bookrunner to raise financing for the oil and gas company’s acquisition of three natural gas utilities from Dominion Energy Inc. It also handled share sales on smaller deals for Intact Financial Corp. and Peyto Exploration & Development Corp.