Mergers and acquisition advisers say M&A activity among Canadian companies is expected to pick up pace after a sluggish first quarter, driven by non-resource deals and a rebound in outbound transactions as pension funds and private equity firms put massive pools of capital to work
Though uncertainty around the renewal of the North American Free Trade Agreement (NAFTA) has cast a cloud over deal activity in some sectors of Canada's economy, bankers expect a resolution to lift deal volumes.
Meanwhile, they also say, changes to the U.S. tax system under President Donald Trump are seen boosting cross-border activity.
Canadian M&A activity in the first quarter of the year dropped to $54.2 billion, down 37% compared with a year ago, data from Thomson Reuters showed on Thursday, weighed down by lower energy deals which were the biggest driver of 2017 activity.
Toronto-Dominion Bank, Lazard and Citigroup took the top three spots in the M&A volume rankings for the first quarter, followed by Goldman Sachs, JPMorgan and Bank of America.
Bankers expect real estate and industrials to be in focus this year.
Despite rich valuations, one expert expects pension funds to pursue new investments, adding: "They're going to be very disciplined with respect to quality and valuation."
The biggest deal in the first quarter was the Blackstone Group-led planned $17-billion acquisition of about 55% in Thomson Reuters Corp's Financial and Risk business.
