Morgan Stanley closes doors in Calgary
Morgan Stanley has closed its Calgary investment banking office, according to people familiar with the matter, as Canada’s energy industry struggles with decreased investor interest and a dearth of deal making.
Denis Rajotte, who was head of Canadian energy investment banking and led the office, is no longer with the bank, the people said, asking not to be identified discussing a private matter. Representatives for New York-based Morgan Stanley declined to comment.
Canada’s oil and gas industry, which is centred in Calgary, has seen a decline in investor interest as a shortage of pipeline capacity in recent years weighed on local prices, restraining the industry’s growth and damping dealmaking activity. Concerns that Canada’s oil-sands industry is contributing to climate change have also been a headwind for the sector, prompting investors including Norway’s $1 trillion wealth fund to divest their holdings.
The country’s oil and gas, oilfield-service and pipeline companies announced $486.1 million of primary or secondary share offerings last year, a fraction of the $18.8 billion of offerings announced in 2016, according to data compiled by Bloomberg.
Companies within the industry have also slowed their dealmaking pace. Canadian oil and gas, oilfield-service and pipeline companies were buyers in $13.7 billion of deals announced last year, less than one-fifth of the $74.5 billion in deals announced in 2016. The pace has somewhat rebounded so far this year, with those companies involved as buyers in $20.5 billion of announced deals.
Canadian energy shares have languished as well. The Canadian S&P/TSX Energy Index has slid 15 per cent in the past five years, compared with a 41 per cent gain for the broader S&P/TSX Composite Index.