Canaccord Genuity Group Inc. is asking its employees to cough up cash for equity in a move that will inch the firm a little closer to the old Bay Street partnership model.
Chief executive officer Dan Daviau says the move is designed to align employees with shareholders, who are concerned about the firm's profitability.
"When you have your employees going into their pocket and writing a cheque to subscribe for shares of our company, that changes people's attitudes," Mr. Daviau said during a conference call with analysts Thursday morning, following the release of the company's fiscal fourth-quarter results.
As a sweetener to buy into the stock issue, employees will be granted half a warrant to buy additional shares. Mr. Daviau said there will be restrictions put in place; employees will be unable to sell their shares, or exercise the warrant, for a number of years.
The stock issue, which is due to be completed via a private placement at market prices over the next few weeks, will dilute common shareholders to the tune of about seven million shares. Canaccord should raise around $30-million in capital from the offering, which the company intends to use mainly to fund future stock-based compensation plans for employees.
In another unusual move, Mr. Daviau and Pat Burke, president of Canaccord Genuity (Canada), are returning large quantities of stock granted to them last year. When he was appointed CEO, Mr. Daviau was granted 1.5 million restricted share units that were due to vest over a number of years.
"Pat and I felt it was the right thing to do. Period," Mr. Daviau said. "We felt that was a better way to align ourselves with shareholders than somebody handing us a bunch of free stock." Story
BMO hunts for U.S. investment banking growth
Expect more from Bank of Montreal's investment banking division in the United States. Having already built a big underwriting and advisory business at home, executives are keen to expand south of the border.
"We have a wonderful business in Canada," explained Perry Hoffmeister, global head of investment and corporate banking, "but where we expect a lot of the growth to come from is the U.S."
As part of this strategy, BMO is buying mergers and acquisitions boutique dealer Greene Holcomb Fisher, based in Minneapolis. The deal adds about 30 M&A specialists to Bank of Montreal's ranks, bringing its total to roughly 70 people in the U.S., and also doubles the bank's deal flow. Together the two businesses advised on 90 mergers and acquisitions worth $77-billion (U.S.) in 2015.
The U.S. has long been an important market for BMO, having bought Harris Bank in 1984 and then doubling down with the purchase of Marshall and Ilsley for $4.1-billion in 2010. Building out its capital markets business is, at a high level, an extension of this growth.
But beefing up in M&A is particularly important right now. The total value of all mergers and acquisitions involving Canadian companies and funds hit roughly $280-billion (U.S.) last year, according to Thomson Reuters, and 80 per cent were outbound, meaning Canadian buyers were incredibly active abroad. That statistic that isn't lost on BMO, explained Andre Hidi, the bank's global head for M&A. Story
Telcos told to taper debt
Private conversations between Canada's telecommunications giants and their debt rating agencies are morphing into very public actions, with the telcos finally signalling they are close to tapping out on debt.
In the past six months, BCE Inc. shocked the market by selling $862-million worth of new shares, its first offering since 2002; Rogers Communications Inc. surprised investors and analysts by not raising its dividend; and Telus Corp. sold its stake in an international call centre to generate cash.
BCE explicitly said proceeds from the share sale would go toward paying down debt, while Rogers and Telus have been a bit more coy but stressed that their balance sheet is a focus. On a recent quarterly call, Rogers' chief financial officer chalked up its dividend decision to "prudent stewardship of our financials," adding that lower debt is a "priority." Story
The big banks' second-quarter scorecard
The big banks' second-quarter financial results were supposed to be imbued with concerns about the impact from a slow economy and weak oil prices. Instead, we got optimism.
While the banks set aside more money to cover bad loans to the energy sector, many bankers assured us that this quarter saw the worst of it – and things would get better from here. As well, although the national economy is plodding, some regions are benefiting from the lower Canadian dollar and the banks are benefiting from their geographic diversification. Story
DAILY DEALS
Concordia Healthcare Corp.'s sale process hit a snag after Blackstone Group and Carlyle Group opted not to pursue a takeover for the Canadian drug maker, according to people familiar with the matter. Story
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