The first quarter of 2013 saw China’s growth slow, commodity prices tumble, and the Eurozone continue to struggle. Add to that the, at best, shaky recovery of the US economy, and it’s not surprising that the Canadian capital markets lost some of the buoyancy they exhibited throughout 2012. Deal volume declined 20% over Q4 2012, while deal value dropped 60% from $60 billion to $24 billion, resulting in the quietest quarter in Canadian M&A since 2010.
But, there is good news. Liquidity has come back in strength in the debt markets, and while the mega-deal, after returning in force in 2012, has been generally absent in Q1 2013, this liquidity has fuelled activity in the middle market across several industry sectors. Real estate investment trusts (REITs) have taken centre stage as Canada’s most active and consistent deal makers. Canadian pension funds were also very active acquirers in Q1, pursuing investments in infrastructure and utility assets around the world, while the energy and industrials sectors secured second and third spots on the top five targeted industries by value, on the strength of three of the four transactions valued at over $1 billion.