Jefferies’ Rothney Gets Ready for a Dealmaking Blitz in Canada Happy new year and welcome to the first 2025 installment of Bay Street Edition, our weekly newsletter devoted to what’s happening in Canadian finance, covering strategy, deals, people moves and a dash of economics. I’m Christine Dobby, Bloomberg’s Toronto-based banking reporter, and you’ll find me in your inbox every Friday. This week, we’re speaking with Jefferies banker Bruce Rothney about what he sees ahead for the year, looking at how Canada’s banks ranked in 2024 and talking Bitcoin ETFs. Plus, one story about people not being terrible. Please share this newsletter with your friends and colleagues, and if it was forwarded to you, sign up here to receive it every week. Bullish Amid the Gloom It’s that time again — time to emerge from the liminal space you lived in from about Dec. 26 to Jan. 2, remember your name and what you do for work, and check back into the world. And what better way to start than by reading an uplifting forecast for Canadian markets, courtesy of Bruce Rothney? The longtime financial services executive is CEO of Jefferies Financial Group’s Canadian unit. The investment banking business he helped launch just over a year ago has had some early successes, particularly in the financial sector. Jefferies wrote the fairness opinion for National Bank of Canada’s board on its landmark acquisition of Canadian Western Bank, and the firm was the lead financial adviser to Abu Dhabi-based Mubadala Capital on its all-cash offer for CI Financial Corp. — a C$4.7 billion ($3.3 billion) deal. Rothney sees the momentum continuing, and here are a few themes he’ll be watching this year. The Economy: A Weak CAD Isn’t So Bad After a year of soft economic growth and rising unemployment, Canadians are in a pessimistic mood to start the winter. About 60% believe the economy will be worse in six months, according to the latest Bloomberg Nanos survey — probably because of Donald Trump’s tariff threats. Yet Rothney is bullish. “Canada is a bit of a laggard, but we believe the tide is turning,” he said, with significantly lower interest rates giving a boosting to growth. In fact, the gap between Canadian and US borrowing costs is rarely this large. Canada's Slower Growth Brings Lower Rates Benchmark government bond yields in the US and Canada Canada has a huge opportunity in artificial intelligence, he said, citing the ties of leading researchers to University of Toronto and other Canadian schools. But to advance the commercial development of the sector, “we need to accelerate the attraction of low-cost, flexible capital that IPO markets bring.” In terms of timing, Rothney sees “quite a number of deals coming to the fore” in the second and third quarters. “I don’t think you’re going to see an explosion in the IPO market, but I think it’ll be constructive.” Value in Unexpected Places “Another area that’s going to be interesting to watch is what I would call ‘embedded infrastructure’ within companies,” Rothney said. “A lot of companies have valuable infrastructure embedded in their balance sheets — including distribution and logistics centers and telecommunications networks.” For example, take Rogers Communications Inc.’s plan to sell a minority stake in parts of its wireless infrastructure to an outside investor for C$7 billion. (Bloomberg and other media outlets have reported that the unnamed party is Blackstone Inc.) “These types of assets have largely been undervalued by the public markets,” Rothney said, adding that alternative asset managers like Apollo Global Management Inc., Blackstone, Brookfield Asset Management Ltd. and Canadian pension funds are now “exploring creative ways to partner with corporates to lower cost and provide flexible capital solutions.” For public companies, that can mean a higher valuation (though the infrastructure deal hasn’t helped Rogers’ share price much yet, maybe because it isn’t done).
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Jefferies’ Rothney Gets Ready for a Dealmaking Blitz in Canada

Happy new year and welcome to the first 2025 installment of Bay Street Edition, our weekly newsletter devoted to what’s happening in Canadian finance, covering strategy, deals, people moves and a dash of economics.

I’m Christine Dobby, Bloomberg’s Toronto-based banking reporter, and you’ll find me in your inbox every Friday. This week, we’re speaking with Jefferies banker Bruce Rothney about what he sees ahead for the year, looking at how Canada’s banks ranked in 2024 and talking Bitcoin ETFs. Plus, one story about people not being terrible.

Please share this newsletter with your friends and colleagues, and if it was forwarded to you, sign up here to receive it every week.

Bullish Amid the Gloom
It’s that time again — time to emerge from the liminal space you lived in from about Dec. 26 to Jan. 2, remember your name and what you do for work, and check back into the world.

And what better way to start than by reading an uplifting forecast for Canadian markets, courtesy of Bruce Rothney?

The longtime financial services executive is CEO of Jefferies Financial Group’s Canadian unit. The investment banking business he helped launch just over a year ago has had some early successes, particularly in the financial sector. Jefferies wrote the fairness opinion for National Bank of Canada’s board on its landmark acquisition of Canadian Western Bank, and the firm was the lead financial adviser to Abu Dhabi-based Mubadala Capital on its all-cash offer for CI Financial Corp. — a C$4.7 billion ($3.3 billion) deal.

Rothney sees the momentum continuing, and here are a few themes he’ll be watching this year.

The Economy: A Weak CAD Isn’t So Bad

After a year of soft economic growth and rising unemployment, Canadians are in a pessimistic mood to start the winter. About 60% believe the economy will be worse in six months, according to the latest Bloomberg Nanos survey — probably because of Donald Trump’s tariff threats.

Yet Rothney is bullish. “Canada is a bit of a laggard, but we believe the tide is turning,” he said, with significantly lower interest rates giving a boosting to growth. In fact, the gap between Canadian and US borrowing costs is rarely this large.

Canada's Slower Growth Brings Lower Rates
Benchmark government bond yields in the US and Canada

Canada has a huge opportunity in artificial intelligence, he said, citing the ties of leading researchers to University of Toronto and other Canadian schools. But to advance the commercial development of the sector, “we need to accelerate the attraction of low-cost, flexible capital that IPO markets bring.”

In terms of timing, Rothney sees “quite a number of deals coming to the fore” in the second and third quarters. “I don’t think you’re going to see an explosion in the IPO market, but I think it’ll be constructive.”

Value in Unexpected Places

“Another area that’s going to be interesting to watch is what I would call ‘embedded infrastructure’ within companies,” Rothney said. “A lot of companies have valuable infrastructure embedded in their balance sheets — including distribution and logistics centers and telecommunications networks.”

For example, take Rogers Communications Inc.’s plan to sell a minority stake in parts of its wireless infrastructure to an outside investor for C$7 billion. (Bloomberg and other media outlets have reported that the unnamed party is Blackstone Inc.)

“These types of assets have largely been undervalued by the public markets,” Rothney said, adding that alternative asset managers like Apollo Global Management Inc., Blackstone, Brookfield Asset Management Ltd. and Canadian pension funds are now “exploring creative ways to partner with corporates to lower cost and provide flexible capital solutions.” For public companies, that can mean a higher valuation (though the infrastructure deal hasn’t helped Rogers’ share price much yet, maybe because it isn’t done).