Toronto-based Canaccord Genuity Group Inc. is seeking to boost its stake in its Australian capital markets and wealth management business, Canaccord Genuity (Australia) Ltd., to 80% from 50%, the company announced on Wednesday.
“This investment provides a stronger foothold to explore opportunities to expand our wealth management businesses and increase contributions from our capital markets business in the region,” says Dan Daviau, president and CEO of Canaccord Genuity, in a statement. “Our Australian team is well integrated into our global platform and has delivered very promising growth in recent years. We look forward to continuing to support their development initiatives in the region.”
Canaccord first entered the Australian market in 2011 when it purchased 50% of BGF Capital Group Pty Ltd. for A$40 million, which then adopted the Canaccord brand but remained 50% owned by its original shareholders. The Australian company operates a mid-market investment bank in the Asia-Pacific region, with investment banking, research, sales and trading business in Australia and Hong Kong. It also has wealth management operations in Melbourne and Sydney.
“We will leverage this increased partnership and the extensive support that it brings to strengthen our position as a leading mid-market investment bank in Australia and provide a differentiated service offering for our capital markets and wealth management clients in Australia and the broader Asia-Pacific region,” adds Marcus Freeman, CEO of Canaccord Genuity (Australia), in a statement.
Canaccord will pay A$36 million ($35.7 million) to acquire the additional 30% stake, including A$15 million in cash, A$15 million in shares (approximately 2.3 million shares), and an A$6 million note.
The proposed deal is subject to regulatory approval, including approval from the Toronto Stock Exchange, and other closing conditions. The newly issued shares will be subject to a three-year escrow arrangement that will see tranches released on an annual basis.