With the acquisition of Halifax-based Acadian Securities Inc., Calgary-based Jennings Capital Inc. has taken a big step toward becoming a national firm with offices in Western Canada, Toronto and Atlantic Canada.

“We see Halifax as a place that, although it’s not growing quickly, is a good base to have in Canada,” says Robert Jennings, chairman and CEO of Jennings Capital. “We have a number of corporate clients there and we want to be where our clients are.”

Jennings Capital acquired Acadian for an undisclosed price in November 2008. Jennings says a deal between the two firms had been discussed over the years at various annual conventions of what was then the Investment Dealers Association of Canada (now the Investment Industry Regulatory Organization of Canada).

As a board member of the self-regulator, Jennings became acquainted with Acadian’s executives. In the summer of 2008, Jennings received a call asking him if he wanted to meet with them.

“It was such a small world, because I was visiting friends just south of Halifax when they called,” Jennings says. “So, when they asked to meet, I said, ‘Well, I’m only two hours away.’

“It’s important for any acquisition to be complementary if it is to be a win/win situation. I think this one has been that,” Jennings adds. “We can expose Acadian to larger deals and expand its range of products and services because we have a bit more size; in turn, it can help us in contacting both interesting investors and interesting growth companies.”

Not only does the acquisition provide Jennings Capital with a new geographical footprint, it also provides the firm with an opportunity to develop expertise in the bond market, an area in which it has not been strong.

“Acadian brought experienced individuals who were actively involved in bonds,” Jennings says, “and provided us with great insight into that area.”

Jennings formed Jennings Capital in 1993. An independent, privately held, full-service investment dealer, the firm offers financial products and services to private and public corporations, institutional investors, individual investors and agencies in Canada, the U.S. and Europe.

Jennings Capital is allied with High River, Alta.-based Western Financial Group Inc., a regional insurance and banking firm that holds a 27.5% stake in Jennings Capital.

During its 15-year history, Jennings Capital has completed more than $4 billion worth of transactions.

Upon completion of the recent acquisition, Acadian’s 10 advisors and executives were brought over to the Jennings Capital family. “Right away, our president, Peter Taylor, flew to Halifax,” says Jennings, “and made sure the office knew what would be happening.”

The location of Acadian’s office in Halifax has not changed, and its clients are aware that the firm is being rebranded as Jennings Capital. Later this month, Jennings will join the Halifax office staff and their clients for a reception welcoming them to Jennings Capital.

Jennings Capital will also maintain Acadian’s role in assisting start-up companies in the Halifax area in finding corporate financing, similar to its successful financing deal with Halifax-based Corridor Resources Inc. The junior resource company is engaged in the exploration for petroleum and natural gas onshore in the Maritimes and Quebec, as well as in the production of natural gas in New Brunswick.

“We helped finance Corridor Resources, and we want to continue looking for future opportunities,” says Jennings. “We feel that this acquisition has already provided us with those opportunities. Obviously, we haven’t had any big deals yet. But we are currently looking at a number of things.”

Jennings Capital will continue to look for acquisitions and for quality advisors. “The key is finding good people, and this financially troubled time is a great time to look for good people,” says Jennings. “We can offer good growth equity in a growing Canadian independent firm.”

As the Acadian deal was being hammered out, Acadian was working on a settlement agreement with IIROC. The Jan. 16 agreement was the result of problems found in the IDA’s annual compliance reviews of Acadian’s head office conducted from 1998 to 2003. The IDA conducted a final review in 2006 to determine if the company was complying with past reviews.

This final review found the firm to be non-compliant in a number of areas in its sales operations, including failure to implement proper controls to ensure complete identification of any related or connected issuers and failure to identify and disclose outside business activities of certain registered representatives, directors and officers.

@page_break@As a result of the settlement agreement, Acadian paid a $100,000 fine as well as the full costs of engaging a consultant to review and evaluate its policies and procedures and make recommendations to the Acadian board.

The settlement was never a concern for Jennings. He was aware that there had been mistakes, he says, and that the issues were being resolved.

Acadian was founded in 1994 by David Hennigar and David Beazley and became a member of the IDA in April 1995. It provided corporate finance, research analysis, fixed-income and private-client brokerage services, and handled more than $250 million in assets for clients.

The firm was initially led by Beazley, who took on the role of president and CEO until 2001, when he left to join the IDA as its Atlantic Region director. The firm then appointed John Hanrahan, an investment advisor who was then working at the firm, to take over for Beazley as CEO.

Hanrahan stayed on for seven years and helped the firm become one of the largest independent investment dealers in Atlantic Canada.

In December 2006, Acadian replaced its management for a third time, when Hanrahan announced he would be selling his shares to the company and launching his own investment dealer — Halifax-based Citadel Securities Inc.

Once again, Beazley stepped into the role of president and CEO of Acadian. With the takeover by Jennings Capital, Beazley is retiring from the industry. IE