Vancouver-based Canaccord Genuity Group Inc. has entered into a private placement agreement with a large Canadian asset manager to raise $60 million that the firm will be dedicating toward expanding its wealth-management business by bringing more financial advisors onboard.
“The proceeds from this placement will directly support our growth plans for our Canadian wealth-management business and creates an opportunity to recruit investment advisors, increase assets under management and improve the profitability of that business,” says Dan Daviau, Canaccord’s president and CEO, in a statement issued on Wednesday.
The firm’s assets under administration in Canada were $9.8 billion as of the quarter ended June 30, up by 6.8% from $9.2 billion at the end of the previous quarter, ended March 31, and a decrease of 7.8% from $10.6 billion at the end of the quarter ended June 30, 2015.
One of the reasons for the drop in AUA is that its Canadian brokerage division, Canaccord Genuity Wealth Management, had 138 advisory teams at the end of quarter ended June 30, down by one advisory team from the previous quarter, ended March 31, and a decrease of nine advisory teams from June 30, 2015.
Canaccord sold convertible unsecured debentures to an unnamed “large Canadian asset manager” at a price of $1,000 per debenture that will bear interest at a rate of 6.5% a year, payable semi-annually on the last day of June and December each year, commencing Dec. 31, with a maturity date of December 31, 2021.
The debentures will be convertible at the holder’s option into Canaccord common shares at a conversion price of $6.50 per share. The debentures will mature on Dec. 31, 2021 and Canaccord may redeem them, in certain circumstances, on or after Dec. 31, 2019.
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