As the year began, some of its top talent departed to join the former chief executive officer at an upstart dealer. Over the course of the winter, a bitter court battle erupted with those former partners.
Its CEO had just been promoted. Come summer, that former CEO signed off on a staggering $2.9-billion legal settlement that threatened to drain its bonus pool. When fall arrived, the federal Finance Minister all but shut down income trusts, a sector where it excels.
None of it mattered to CIBC World Markets Inc. In a year that speaks to the depth and focus of its people, and the power of the machine, the brokerage house was Canada's top equity underwriter. It marked the fifth consecutive year that the investment dealer arm of Canadian Imperial Bank of Commerce has won this honour.
It was the best year for stock issues since the heady days of the tech boom in 1999. As soaring resource stocks buoyed the market, investors bought $44.4-billon worth of new Canadian equity in 2005. Income trusts made up 46 per cent of that total, an impressive showing when one considers that the market imploded in the fall after Ralph Goodale moved to rein in, then ultimately bless, the sector.
Over the course of the year, CIBC World Markets won the coveted "bookrunner" role, also called "top left," on 57 sales of common stock, trusts, preferred shares and convertible debentures that were worth $6.2-billion. In all, the investment bank took part in 198 financings, a dozen deals more than the next closest competitor.
"The entire team did a great job of staying focused on clients, and not getting distracted," said chief executive officer Brian Shaw, who took the top job in 2004 after working his way up from the trading desks. "The quality and depth of our people has always been a defining characteristic of this place. Clients gave us their business, which they don't have to do, and that speaks volumes about our people."
In addition to a leading role in the equity market, CIBC World Markets raised $4.9-billion by winning bookrunner status on 36 offerings of what's known as structured products, such as funds of income trusts. This was twice the traffic in structured deals seen by any other Bay Street firm.
The bookrunner title is awarded to the investment house, or houses, that really run a deal. The concept reflects the fact that just one dealer, or a very small group, is charged with running the "book" that lists all investors interested in buying new stock. It's a role that all dealers strive to fill, as the bookrunner typically earns extra fees for co-ordinating the other brokerage houses that help sell an underwriting.
In the complex politics of these tables, second-place RBC Dominion Securities Inc. ended up sharing bookrunner status on the year's biggest common stock offering, a $461-million float by ACE Aviation Holdings Inc., a move that helped the airline but cost RBC Dominion top spot.
And in a showing that speaks to the lack of justice in these rankings, BMO Nesbitt Burns Inc. won third spot on the league tables in part by pushing deals that fared poorly, such as a $198-million initial public offering of FMF Capital Group Ltd., an income trust that crashed within months of being launched.
CIBC World Market's biggest deals included a sole bookrunner role for Enerplus Resources Fund when the company raised $491-million, and shared duties on a $1.4-billion sale of units by Yellow Pages Income Fund.
The hot sector for underwriting was, not surprisingly, energy. With oil and gas prices rising and a flurry of takeovers rocking the oil patch, four of the 10 largest underwritings were for energy trusts.
One dollar in three raised in equity markets last year -- 32 per cent of all financings -- went to the oil and gas companies, including energy trusts.
There was also a surge in preferred share offerings from banks and insurer, as these companies also tapped into income-hungry investors.
The quietest sector was technology, which saw just $500-million worth of financings. The largest tech deal was a $140-million IPO from hardware company Miranda Technologies Inc. Looking ahead, the dealers see more of the same: Lots of trust offerings and other income-related equity sales, but weak investor demand for growth-oriented stock offerings such as tech deals.
Top twelve dealers in equity underwriting
This chart measures the value and number of common stock, trust, preferred share and convertible debentures underwritings that an investment house led as the so-called bookrunner, which is the designation given to the dealer who does the bulk of the work on the transaction.
|Company||Value ($million)||Deals as bookrunner|
|CIBC World Markets||$6,200||57|
|BMO Nesbitt Burns||4,700||54|
|National Bank Financial||1,600||19|
|Raymond James Securities||700||11|
Top twelve dealers based on the equity actually sold
This chart shows the total number of underwritings that an investment house was involved with in any manner, and the total value of equity each dealer sold.
|Company||Value ($million)||Number of underwritings|
|CIBC World Markets||$5,000||198|
|BMO Nesbitt Burns||4,200||163|
|National Bank Financial||2,400||154|
Top five dealers in structured products
This chart shows which dealers sold the most structured product, such as funds of income trusts.
|Company||Value ($million)||Deals as bookrunner|
|CIBC World Markets||$4,900||36|
|RBC Dominion Securities||2,300||18|
|National Bank Financial||474||5|
SOURCE: THE GLOBE AND MAIL
© The Globe and Mail
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