Bank of America Corp. was the top adviser for Canadian mergers and acquisitions for the first time in two decades last year, grabbing the title during a record run of dealmaking.

BofA Securities advised on 28 deals with a combined value of $120.7 billion, according to 2021 data compiled by Bloomberg. The total value of all Canadian acquisitions announced last year was $437.6 billion, trouncing the $330 billion record set in 2007.

The frenzy was driven by cheap financing for buyers, attractive prices for sellers and extra capital that companies had stockpiled to brace for the pandemic, which didn't end up taking the bite of earnings that they'd feared. Takeovers were further bolstered by a handful of megadeals that, while aided by market conditions, were driven by longer-term factors.

"It was a bit of a perfect storm in support of M&A in 2021," said Deep Khosla, Bank of America's co-head of Canada corporate and investment banking with Drew McDonald. "The equity markets were very receptive to deals with strong strategic rationale. There was plenty of liquidity in the system, which provided an attractive environment to finance deals. And companies also had extremely strong corporate balance sheets."

Bank of America last topped the rankings for Canadian dealmaking in 2001. McDonald, who was promoted with Khosla last year, attributes the firm's recent success partly to that move, which coupled Khosla's background in investment banking in Montreal with McDonald's experience running the corporate side in Toronto.

"That further integrates our advisory capabilities with our capital-raising capabilities, both domestically and internationally," McDonald said. "We think that's a great model to help our clients in Canada, outbound and inbound."

Bank of America advised on the two biggest deals announced last year: Canadian Pacific Railway Ltd.'s $26.7 billion acquisition of Kansas City Southern, and Rogers Communications Inc.'s C$19.5 billion ($15.3 billion) takeover of Shaw Communications Inc.

Brookfield Asset Management Inc. was a particularly active acquirer, striking a C$9.4 billion takeover of AusNet Services Ltd., while Brookfield Infrastructure Corp. bought Inter Pipeline Ltd. for C$6.9 billion.

"There's an increasing allocation of capital to private assets by many institutional investors," said Dougal Macdonald, president of Morgan Stanley Canada. "This has led to alternative managers, including private equity and infrastructure funds, with unprecedented levels of dry powder and easy availability of financing.""

Morgan Stanley handled 35 deals with a total value of $106.5 billion in 2021, putting it in second place.

How the economy handles the current omicron-fueled wave of the pandemic will be the top issue for the deals market this year, said Michael Klym, Goldman Sachs Group Inc.'s head of Canadian mergers and acquisitions. With funding markets still favorable and companies still looking to bolster their businesses, Klym said he's confident 2022 will be strong for deals in Canada and globally.

"If you're a Canadian issuer or a broader issuer, and you have something that you want to address in your portfolio, this is the time to go and do it," Klym said. "And investors have more or less rewarded that, across sectors."

Goldman worked on 36 deals, with a total value of $106.4 billion, putting it in third place. The firm was the top adviser on deals in 2020.

Some of the deals this year may be driven by companies seeking to improve their technological prowess, while others may be geared toward bolstering firms' ESG credentials, said Trond Lossius, Barclays Plc's head of mergers and acquisitions for Canada. Traditional energy sectors like oil and gas also may be poised for active dealmaking, he said.

"Some of the strong cash-flowing businesses or assets that are maybe not on everyone's approved list are starting to present very compelling targets for private equity in particular, and other sources of capital that maybe have less of an ESG overhang," Lossius said in an interview.

Bank of Montreal's capital-markets units had a bigger pipeline heading into the 2021 winter holidays than it did a year earlier, setting the stage for what could be a "pretty incredible" year for dealmaking, said Sarfraz Visram, head of the Canadian and international mergers and acquisitions groups for BMO Capital Markets.

"This is the most broad-based M&A environment we've ever seen — it's every sector and every size range," Visram said in an interview. "I'd be hard-pressed to tell you that any one sector is going to outperform, and while I'm sure one will, I see strength in every single one of our industry verticals right now."

Kevin Orland reports for Bloomberg News.

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