20 Reasons why Canadian capital markets were the place to be in 2011

Canada bucked the global trend in 2011, but external risks pose major threat to growth in 2012

TORONTO, Dec. 19, 2011— PwC’s December Capital Markets Flash report www.pwc.com/ca/cmf sets out 20 reasons why Canadian markets were a great place to be during 2011. “All things considered, 2011 was a stellar year for Canadian markets,” says Kristian Knibutat, PwC’s Canadian Deals Leader. “This is notable, but it is critical to remember that there can be no ‘last one standing’ in a global economy. As go the big players, so goes Canada.”

Reflecting on 2011, PwC highlighted a number of interesting facts & figures:

142: number of Canadian private equity deals announced in the first three quarters of 2011; 130: total number in 2010; 86%: increase in value of private equity deals over 2010 (to $9.1 billion).

$47 billion: value of equity capital raised on the TSX, TSX-V year to date; 8%: increase over the same period last year.

45: number of corporate IPOs on the TSX-V year to date; 22%: increase in volume over the same period in 2010.

$95 billion: market capitalization of US-based companies listed on the TSX; $22 billion: market capitalization of Europe-based companies listed on the TSX; $15.6 billion: market capitalization of China and South & Central America based companies listed on the TSX; 109: number of Africa based mining companies on the TSX-V; 12%: increase in international listings on the TSX year to date.

$6.3 billion: total deal value of CPPIB’s acquisition of US-based medical device manufacturer Kinetic Concepts in 2011; $5 billion: total deal value of Onex / CPPIB acquisition of British manufacturer Tomkins in 2010; #1: rank of deals on North American PE league tables (by size) in each of 2011, 2010.

10%: increase in year to date Canadian M&A volumes versus comparable period in 2007 (the “peak”).

9,500: number of mining projects held by companies listed on the TSX, TSX-V; 50%: percentage of projects that are outside of Canada; 60%: percentage of the world’s mining equity capital raised on the TSX, TSX-V; 1st: global rank of TSX for number of mining and energy companies publicly traded.

$73 billion: year to date value of corporate debt new issues in Canada; $64.2: annual issuance value in 2009; $38.5 billion: aggregate issuance value in 2000.

$2.2 billion: amount paid by China’s state-owned Sinopec in 2011 to acquire 100% of Daylight Energy Ltd; $4.65 billion: amount paid by China’s state-owned Sinopec in 2010 to acquire a 9.03% interest in Syncrude Canada; #1: rank of deals in league table of acquisitions in North America by China (by size) in each of 2011, 2010.

$1.07 trillion: interest paid in 2011 by the US, UK, Japan and the 17 countries in the euro area to service their government debt; $30 billion: amount of interest paid by Canada.

#1: Canada’s ranking on the World Economic Forum list of the most sound banking systems in the world; $23.6 billion: big six Canadian bank profits in 2011; 15%: increase in big six bank profits over 2010; $11.4 billion: value of acquisitions by the big six Canadian banks in 2011.

90: the number of bank failures year to date in the US; 157: number of failures in 2010; 0: number of bank failures in Canada in recent history.

No: shareholders’ answer to the London Stock Exchange Group’s acquisition offer for the TMX Group; 30: the number of successful M&A deals in 2011 involving security and commodity exchanges worldwide; 55%: proportion of cross border activity this year involving a Canadian entity taking control of a foreign entity.

$6.4 billion: value of commercial real estate acquisitions by Canadians in the US; $2 billion: value of Canadian investments in New York City property portfolios; 3rd: Rank of Brookfield Office Properties among New York City commercial property landlords.

Home: Winnipeg Jets after a 15 year hiatus in the US; $170 million: price paid by True North Sports and Entertainment to bring them back.

$80 billion: estimated value of invested capital to be associated with Plan Nord, one of the biggest, most important social projects in Canada’s history.

$500: per acre price of land in Saskatchewan; $1,400/acre: comparable price in Alberta; $3,000/acre: comparable price in the US; $10,000/acre: comparable price in the UK; 10 acres: limit on foreign ownership of land in Saskatchewan (unless special permission is granted).

$326 million: price paid for Radian6, a New Brunswick-based social media start-up acquired by US cloud computing giant salesforce.com.

140%: increase in Canada’s lumber exports to China year to date 2011; #2: rank of Chinese market for Canadian lumber exports; “The China effect”: term used to describe the recent breakdown between the historically tight relationship between the US homebuilding market and the price of lumber.

$550 billion: market capitalization of Canadian public companies based in Alberta. 26%: proportion of total TSX, TSX-V market capitalization represented by Alberta based companies; 3.3% year to date increase in market capitalization of Alberta based companies: (2.1%): year to date decline of S&P 500

The report suggests that three key external risks will pose threats to continued growth in Canada in 2012 According to Knibutat the three risks are:

#1) Developed world austerity: Over $2.5 trillion in austerity may be required in order to balance budgets in key developed countries. “The scale of this potential economic retrenchment is meaningful. $2.5 trillion represents close to 20 times the inflation-adjusted cost of the Marshall Plan.”

#2) Slowing growth in the emerging world. Emerging markets have not fully decoupled from the West. “Canada has had the good fortune of being able to reorient away from the slow growing West world towards fast-growing emerging and developing nations. Should these emerging markets continue to face headwinds, Canada may be left facing a double-whammy.”

#3) Political inertia. The coordinated, decisive action required to solve today’s economic dilemmas may prove elusive next year. “2012 and early 2013 will see an inordinate number of elections and potential leadership changes in key regions, a backdrop that, at best, will result in piecemeal reform and, at worst, will result in political inertia.”

The full report is available at www.pwc.com/ca/cmf

About PwC’s Deal Team
PwC’s Deal Team (www.pwc.com/ca/deals) helps clients to achieve deal success—from concept to close and beyond. As part of the world’s largest Transaction Advisory practice¹, and with our global Corporate Finance group being 2010 Upper Mid Market M&A Advisor of the Year², the PwC Canada Deals Team is your gateway to an exciting new world of emerging M&A opportunities.

¹ Source: Kennedy;”Business Advisory Services Marketplace 2009-2011”; ©BNA Subsidiaries, LLC. Reproduced under license.
² Source: Acquisitions Monthly Awards 2010

About PwC Canada
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Notes:

Year to date is at December 1, 2011 or the closest approximate business day information was available (+/- 5 days)

Sources:

M&A data is per Capital IQ and is current through December 1st, 2011

Private equity data as per the CVCA and is current through September 30, 2011 (the most recent quarter of data available)

TSX, TSX-V and mining data as per the Toronto Stock Exchange (MiG report, Mining Industry Profile)

Saskatchewan per acre prices (with comparables) as per MacPherson, Leslie & Tyerman LLP