Rockwater Capital Corp. and First Associates Investments Inc. announced today that they have signed a letter of Intent that will result in Rockwater acquiring First Associates, an independent, employee-owned investment management boutique.

Merger of the two Toronto-based firms establishes Rockwater as a publicly owned, independent investment management firm with assets under management of more than $400 million and total annual revenues of $17 million.

On closing, and following the $10 million equity financing, the management and employees of the combined company are expected to hold common shares representing approximately 45% of the total equity capital of Rockwater.

“First Associates is comprised of a group of disciplined investment professionals who have successfully established a high quality franchise in the market,” noted Bob Schultz, Rockwater’s chairman. “Over the near term, we expect to further strengthen this core team with additional capabilities, particularly in the asset management, private client wealth management and capital markets businesses.” Schultz is the former CEO of Merrill Lynch Canada Inc.

“The partners of First Associates are excited about joining with Rockwater management to build a firm dedicated to client excellence. By combining our talents and capital, we form a dynamic alliance positioned to grow into Canada’s leading independent firm,” noted Richard Stuchberry, First Associates’ chairman and CEO.

Rockwater also announced that Mark Maxwell, co-founder of Georgian Capital, will head the firm’s asset management group. “I am looking forward to working with the exceptional team from First Associates to grow our portfolio of assets under management,” said Maxwell.

The First Associates transaction, which is subject to regulatory approval, is expected to close by the beginning of October 2002.

Until June of this year, Rockwater Capital Corp. was known as McCarvill Corp., a merchant bank that provided growth capital to emerging and mid-market growth businesses on a portfolio basis. In March 2002, the company announced plans to refocus its business strategy on opportunities in the financial services sector. The acquisition of First Associates represents the first step in implementing this new business strategy.