The head of Wellington West Capital Inc. is confident he has found the financial backing he needs to pounce on opportunities created by ongoing market turmoil.

Charlie Spiring, CEO of the Winnipeg-based brokerage, says the deal to sell 12.5% of the firm to National Bank Financial Group for $35.8 million, or $54.40 per share, paves the way to make acquisitions worth between $200 million and $500 million.

If Wellington West is able to surpass a number of revenue targets within 36 months, the firm will receive another $35 million, or $53.10 per share, from National Bank Financial.

“One of our great bragging rights is we’ve never had a losing quarter in our 15-year history,” he says, noting if the potential payout is achieved, the company will be valued at more than $500 million.

All of the proceeds from the sale will be allocated to growth strategies, so Wellington West can become the pre-eminent independent firm in Canada, Spiring says.

“My concern was that if we had a slower market, we couldn’t keep our foot on the accelerator. I wanted to be able to take advantage of the turmoil in the marketplace, just like we advise our clients to do,” he says.

Spiring says the firm had been relying on “the bank of Charlie” up to this point to fund its growth but that wouldn’t be sufficient going forward.

“The banks are richer than Charlie the last time I looked,” he says.

Spiring says the company won’t waste any time in putting that capital to use as it already has a deal signed to purchase another dealer. The announcement will be made before the end of the year.

Spiring says Wellington West has been looking for a financial partner since it bought back about 9% of its own shares from the now-defunct Crocus Investment Fund in 2006.

Kish Kapoor, president of Wellington West, says finding a deep-pocketed partner ensures that the company is on an even playing field with other independents that have already teamed up with much larger backers.
He says the new-found financial clout will allow him to recruit some of the most successful advisors in the country.

“We’re talking to more brokers now than we ever have in the history of our firm. We have a sufficient amount of cash so every person we want to attract, I won’t be worried whether we have enough capital to recruit them,” Kapoor says.

Buying a piece of Wellington West is the latest move by National Bank Financial, which has been aggressively building out its presence in English-speaking Canada over the past couple of years. Earlier this spring, it purchased another Winnipeg-based firm, Bieber Securities.

Luc Paiement, the bank’s executive vice president of wealth management, says the investment in Wellington West reflects its desire to further expand its distribution capabilities.

“We have tremendous respect for what Charlie has achieved in building one of Canada’s premiere wealth management firms and we have great confidence in Wellington West’s growth potential and leadership within the independent space,” he says.

Spiring says he was comfortable in partnering with National Bank Financial, which will also get one seat on Wellington West’s nine-member board, because it has long provided the company’s back office and custodial services.

“They’ll give us some guidance on how we can grow faster. I’m excited about that but we control everything, when and how,” he says.

Wellington West hasalmost 130 brokers in 30 offices across the country overseeing more than $10 billion in assets. Spiring says he wants to double the size of the firm within three years.