Jennings capital inc. is saying hello to 2012 by saying goodbye to its Halifax office. And if no buyers are found for the Calgary-based investment dealer’s retail operations in Nova Scotia, the office’s doors will close on Feb. 29.
This move is more about operational fit than a result of the global financial meltdown, says Michael Cappuccitti, a senior vice president and director with Jennings Capital in Toronto: “[The Halifax operation] is a non-core office. Our core competencies are in Toronto and Calgary, and that’s where we are concentrating. We like to do smart deals, not grassroots deals. We’re involved in the junior and mid-sectors, not exploration.”
All of which made Jennings’s purchase of Acadian Securities Inc. in 2008 a surprise. Halifax-based Acadian was one of the few local brokerage firms left in Nova Scotia. Founded in 1994 by investment banker David Hennigar, Acadian offered traditional services — research and analysis, bonds, corporate finance and retail sales.
Now, in hindsight, it appears the purchase was not prudent — at least, from Jennings’s perspective. Jennings is looking for a buyer for its Halifax operation; there is interest, says Cappuccitti: “We’re talking to a few parties right now.”
The Halifax office has eight brokers on staff, seven of whom were former Acadian employees. One broker will continue to work for Jennings while being based in Halifax, and the company is hoping to assist the remaining employees by finding a suitable buyer. “We’re trying to help everybody,” says Cappuccitti. “We’re not abandoning anybody.”
Jennings is also not scaling back or nixing the idea of expansion elsewhere, he adds: “We’ll be looking for other opportunities. We’re not shrinking.”
Jennings is marking its 19th anniversary this year. It opened its first office in Calgary in 1993 and has since expanded to Toronto. In its first 15 years in business, the firm completed more than $4 billion worth of transactions.
In 2002, Western Financial Group made its first investment in Jennings; now, Western Financial holds an almost 30% interest in the brokerage house. In 2011, Western Financial, in turn, was purchased for $440 million by Lévis, Que.-based Desjardins Group.
Cappuccitti believes Atlantic Canada may need a helping hand in establishing itself as a thriving financial hub. He notes that at a conference two years ago that was organized by the Nova Scotia Securities Commission, concern was expressed that capital-pool companies couldn’t get launched in the province. “There was no one to do them there,” Cappuccitti notes. “Dealers out West would open accounts. It’s a shame. The whole East Coast area is underserved.”
Yet, the financial services sector remains an area of focus for Nova Scotia. The province’s business-development arm, Nova Scotia Business Inc., notes on its website: “Since 2006, Nova Scotia’s financial services and insurance sector has seen phenomenal growth with major international firms establishing back- and middle-office operations in Halifax.”
Those firms include Citco Fund Services, Butterfield Fund Services (Bermuda) Ltd., CIBC Mellon and ING Direct Canada. (NSBI did not respond in time to requests for an interview.)
A flurry of announcements several years ago focused attention on Halifax as a financial services newcomer with promise. But the most recent news release from NSBI about the sector came last April, when the agency said it had extended its payroll-rebate agreement with Citco. According to that release, the three-year extension may lead to as many as 200 new jobs in Nova Scotia beginning in 2014, after the current agreement expires. The extended deal also increases maximum job-creation targets to 375, potentially bringing Citco’s total job growth in Halifax to 575.
“There is clearly opportunity here,” says Cappuccitti — but not, it appears, for Jennings. IE