Apr 30, 2014
Legal Post, National Post
Oil and gas lawyers are divided on whether the increased activity on the equity side of oil and gas capital markets in the second half of 2013 will translate into stronger M&A activity in 2014.
But the momentum may be growing faster than expected.
“So far, corporate finance activity is much stronger this year than it was at this time last year when conventional finance markets for energy issuers were effectively closed,” said Frank Turner in Osler, Hoskin & Harcourt LLP’s Calgary office.
The drop-off in SOE investment in Canada is behind much of the poor M&A market in 2013. Indeed, SOE investment in Canada fell from $28-billion in 2012 to less than $2-billion in 2013.
Some lawyers attribute the decline to the Investment Canada Act amendments announced in May 2013. The changes introduced a new and unanticipated level of uncertainty into the federal government’s treatment of proposed investments by SOEs.
“The ICA announcements basically shut down SOE investment,” Mr. Turner said.
But Mr. Turner also believes that SOEs will show renewed interest in Canada this year, although perhaps not at previous levels.
“I think the federal and provincial governments have satisfied the SOE community that the review rules are manageable and that we’re open for business,” he said. “For sure we’ll see more investment from the Chinese, but also from Korean and maybe even Indian interests who have been circling the market for several years.”
SOEs aside, Mr. Turner also expects private enterprise from China and elsewhere to enter the Canadian market.
“Private companies have received fairly strong signals from the Chinese government that international investment is permissible and they have hundreds of millions if not billions of dollars to deploy,” he said.
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