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Streetwise

News and analysis on Bay Street and the world of finance
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Entry archive:

National Bank quickly takes writedown on Germany's embattled Maple Bank

DAVID BERMAN

When German regulators on Sunday essentially shut down Maple Bank GmbH, the German subsidiary of Maple Financial Group of Canada, following ongoing investigations into its trading activities, National Bank of Canada’s quick response showed that the move was no surprise.

The bank, which owns a 24.9-per-cent stake in the parent company, immediately announced that it was taking a $165-million reserve against the full value of its investment, which will appear in the bank’s first quarter results at the end of the month.

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Tavani’s new recruit has experience in ‘relationship investing’

JACQUELINE NELSON

Brian Gibson is bringing aboard a new recruit with experience in his not-quite-activist style of investing.

James Alder is joining Mr. Gibson’s relatively new firm Tavani Relationship Investors Inc. – still in fundraising mode – that straddles the lines of private equity and shareholder activism. The firm buys stakes in businesses, and then partners with management teams with the goal to improve results.

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Lexpert: Key players in the Progressive Waste inversion deal

LEXPERT

Lexpert Roundup on the Business of Law

Lexpert identifies and reports on emerging business issues and practice areas in the business of law. Whether online, in our magazine or in the DealsWire e-newsletter, we chronicle deals and lawsuits of interest, and cover issues of broad concern to the legal profession and those who purchase legal services. We hope you enjoy this sample of our latest content.

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Dundee parts ways with three senior staffers

NIALL McGEE

Dundee Capital Markets Inc. has parted ways with three senior members of its sales and trading team, according to sources.

Karen Mate, Jeff Crane and Martin Lavigueur have left the Toronto-based brokerage firm.

Ms. Mate had been with Dundee since mid-2013 and was vice-president institutional sales. Earlier in her career, she spent 14 years at Scotia Capital.

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Lexpert: Canada moves to accepting U.S. corporate tax refugees

From accepting U.S. draft dodgers in the 1960s, Canada has moved in more recent times to accepting U.S. corporate tax refugees. The most recent example? Texas-based Waste Connections Inc., which is buying Canada’s Progressive Waste Solutions Ltd. and relocating the parent company to Ontario.

Burger King used a tax inversion in its purchase of Tim Horton’s and so did Valeant Pharmaceuticals in its acquisition of Biovail Corp., to name a couple more. For corporate law firms struggling with a shrinking client pool, there is work to be mined – not just in structuring the transaction but also in doing the ongoing legal work for the former U.S. head office.

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Ontario’s eSentire raises $20-million in VC funding to tackle digital security threat

SHANE DINGMAN

ESentire Inc., the Cambridge, Ont., digital security software and threat intelligence provider, has raised $19.5-million (U.S.) in new venture capital as it looks to expand its sales teams and operations centres internationally.

The financing, while a relatively large number in Canadian VC circles, is part of a trend of significant investments in the security sector. U.S. companies in the digital security field raised $2.5-billion with 225 investments in 2014, though estimates from CB Insights suggested 2015 saw a slight slowdown.

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Will certainty of royalty regime trigger more oil patch deals?

JEFFREY JONES

With Alberta’s energy royalty question settled, there’s one more reason for oil patch deals to pick up.

Yes, 2015 turned out to be slower than expected for mergers and acquisitions, even as numerous companies found themselves drowning in debt due to skidding crude prices and their stocks sank to the bottom.

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Georgian Partners the belle of the Canadian venture-capital ball

SEAN SILCOFF

Toronto’s Georgian Partners is attempting to amass one of the biggest war chests of a Canadian venture-capital firm in years – a $300-million (U.S.) fund – on the strength of several recent big wins, including last year’s initial public offering of Shopify Inc., which it first backed in 2011.

Sources in the Canadian venture-investing sector say that after just a few months of fundraising, Georgian hit its initial $100-million close on the fund – its third since the firm’s inception in 2008 – around Christmas 2015. They say Georgian has secured initial commitments from past backers, including Terlays Capital, Kensington Capital Partners, Northleaf Capital Partners, Export Development Canada and Bank of Montreal, and is on track to easily raise the next $100-million largely from Canadian investors. Georgian is aiming to raise a significant chunk from U.S. investors, hoping for a fund close in the second quarter. “It’s happening very quickly. They’re in a state where everyone wants to marry them,” a senior source in the Canadian venture-capital industry said. “It’s very rare for a Canadian fund.”

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Private equity and venture capital firms strengthen foreign ties

JACQUELINE NELSON

Canadian private equity and venture capital firms played a bigger role in international deals last year, while also making up a larger slice of the deal market at home.

The country’s private equity and buyout funds worked on 137 deals abroad in 2015, which was more than ever before, according to data from Thomson Reuters. But they weren’t always looking far afield – more than 60 per cent of those deals were investments in U.S. companies.

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Alberta’s new royalty regime leaves some questions unanswered

JEFFREY JONES

A frequent criticism of Alberta’s energy royalty review over the past six months was the uncertainty it created for investors. A few unknowns linger after Friday’s rollout of the new regime.

Industry and investor reaction to the New Democratic Party’s new royalty framework was largely positive after the provincial government left oil sands royalties unchanged and established a flat rate on conventional oil and gas production before capital costs of drilling are paid out.

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Old money, new tech: Seymour Schulich bets on VC fund

SEAN SILCOFF

Seymour Schulich, one of Canada’s wealthiest mining entrepreneurs, is making a big bet that he can strike gold in a different sector: high tech.

Mr. Schulich has committed more than $50-million to a venture capital fund launched by a new Canadian-U.S. venture capital firm, Leaders Fund. The firm is being co-led by his son-in-law, David Stein, an accomplished tech entrepreneur whose two previous firms, Workbrain and Rypple, sold to U.S. companies. The VC firm announced last month it had closed the $100-million fund but made no mention in its release of the Schulich connection.

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Weekly Deals: Jacob Securities’ shaky final months and Frind’s investment problem

DEAL OF THE WEEK:

Borealis buys second-largest stake in Spanish oil transport giant CLH

Another Canadian pension fund is buying a slice of a Spanish oil transport giant, spotlighting the impact that some of the country’s largest investors could have in energy infrastructure deals at home and abroad.

Borealis Infrastructure, a division of the Ontario Municipal Employees Retirement System, will be the second-largest investor in Spain’s largest oil transport and storage company. The pension fund gathered up a 24.15-per-cent stake in Companía Logística de Hidrocarburos (CLH) through two recent deals, building out its investment footprint in Europe.

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Hydro One’s latest acquisition marks shift in electricity business

JACQUELINE NELSON

Hydro One Ltd. is tightening its grip on Ontario’s electricity transmission network, snapping up a century-old business in a deal that highlights the evolution of the province’s power system.

Ontario’s largest electrical utility said Friday that it would buy Great Lakes Power Transmission LP for $222-million in cash from Brookfield Infrastructure Partners LP, while taking on $151-million of Great Lakes’ debt. The deal will increase Hydro One’s transmission capacity in Ontario to more than 98 per cent, according to the Ontario Energy Board, up from about 97 per cent. While it’s not a big jump in market share, Great Lakes is the second-largest transmission group in the province, leaving just a few small players still standing.

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Borealis buys second-largest stake in Spanish oil-transport giant CLH

JACQUELINE NELSON

Another Canadian pension fund is buying a slice of a Spanish oil-transport giant, spotlighting the impact that some of the country’s largest investors could have in energy infrastructure deals at home and abroad.

Borealis Infrastructure, a division of the Ontario Municipal Employees Retirement System, will be the second-largest investor in Spain’s largest oil transport and storage company. The pension fund gathered up a 24.15-per-cent stake in Companía Logística de Hidrocarburos (CLH) through two recent deals, building out its investment footprint in Europe.

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Tech ventures and conflicts between common and preferred shares

ADRIAN MYERS

To celebrate the new year, I took a magic trip to the land of the Splash Brothers and Zuckerberg unbound (or perhaps untaxed). Most amazingly, everyone seemed to be riding a unicorn to fame and fortune.

I speak, of course, of San Francisco, where, in the midst of the tech boom, the hottest companies aren’t traded on a public exchange. Uber, Airbnb, Palantir and others are private companies with valuations over $1-billion (U.S.) or, as they’ve come to be known, unicorns.

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Daily Deals: Resource rumblings and Markus Frind’s empty fishing net

ARON YEOMANSON

DEAL(S) OF THE DAY:

It’s all about resources

The would-be biggest liquefied natural gas trader in the world cleared its last major hurdle Wednesday when Royal Dutch Shell shareholders approved the company’s $49-billion takeover of BG Group.

BG’s shareholders are expected to approve the merger Thursday, paving the way for a Feb. 15 closing.

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Anglo American mulls sale of Brazilian nickel assets

RACHELLE YOUNGLAI

Anglo American PLC is considering selling its Brazilian nickel operations as the company races to overhaul its business amid the prolonged slump in commodity prices, according to people familiar with the matter.

The London-based miner is under immense pressure to strengthen its balance sheet with metal and mineral prices in the dumps. Anglo has already suspended its dividend, announced 85,000 job cuts, as well as plans to divest underperforming assets.

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Lexpert: The future of ‘poison pills’ as new takeover-bid rules loom

A pair of decisions on shareholder-rights plans by two securities regulators have cast light on how so-called “poison pills” will be dealt with in the lead-up to the Canadian Securities Administrators’ newly proposed takeover bid regime.

The late November decision by the Alberta Securities Commission in Canadian Oil Sands and, earlier in the month, by BC Securities Commission in Red Eagle will go some way to answering two key questions: First, what should targets and acquirers involved in hostile bids do while the old rules remain in force and the new rules loom? And, second, what final form are the rules likely to take?

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Frind's venture investment problem: Not enough fish

SEAN SILCOFF

Markus Frind can’t find anything to buy.

The Vancouver tech entrepreneur, who sold his online dating site Plentyoffish.com last year to Match Group for $575-million (U.S.), has set aside about $100-million (Canadian) of his net worth to invest in startups (he was Plentyoffish.com’s sole owner).

Last year he plowed more than $20-million into online Vancouver furniture retailer Cymax Stores Inc. and led a $9-million financing of another hometown firm, financial technology firm Grow (formerly Grouplend).

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Betting on a recovery: Banker brothers target energy with new PE firm

JEFFREY JONES

A pair of banker brothers has started a private equity firm that aims to track an eventual recovery in energy markets.

Paul Colucci, who headed Dundee Securities’ London office until last year, and Matt Colucci, previously at AltaCorp Capital Inc., are in the process of identifying investments and amassing capital for the firm, PillarFour Capital, as oil and gas markets sputter.

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A bold suggestion for AGF: Sell itself, soon

TIM KILADZE

Sometimes it takes an outsider to suggest the radical ideas that shake the status quo.

On the same day that mutual fund company AGF Management Ltd. released its latest quarterly earnings, prompting analysts to revisit their short-term target prices, fund manager Rob Wessel of Hamilton Capital went public with a bold idea: sell the whole firm. And soon.

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Laurentian Bank CEO has a message: Big changes are coming

DAVID BERMAN

Laurentian Bank of Canada has ambitious targets: Double its size, in terms of assets, and get its return-on-equity in line with the big banks by 2022.

The two goals were delivered during the bank’s investor day on Tuesday, when chief executive officer François Desjardins reviewed some of the bank’s recent achievements but also pointed out that big changes are coming.

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Daily Deals: Dundee eyes old partnership model and Sun Life gets creative

ARON YEOMANSON

DEAL OF THE DAY:

Dundee plans management buyout

Dundee Corp. has been getting creative in its quest for cash as it grapples with the commodity rout.

That continued Tuesday with a plan reported by The Globe and Mail’s Tim Kiladze, Niall McGee and Jeffrey Jones: Employees of the capital markets division are quietly moving to take the dealer private through a partnership model that has largely fallen out of vogue.

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Turmoil marred Jacob Securities’ final months

NIALL McGEE

The final months of life for Jacob Securities Inc. were marred by capital deficiencies, compliance violations, a senior executive’s abrupt exit and employees being locked out of the office, according to documents released Tuesday.

Amid the pandemonium, the Toronto-based broker dealer was still trying to raise money for a new fund, say documents from the Investment Industry Regulatory Organization of Canada (IIROC). On Dec. 18, IIROC announced it had suspended Jacob Securities’ membership, which effectively put the dealer out of business.

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Dundee Capital Markets plans management takeover

TIM KILADZE, NIALL McGEE and JEFFREY JONES

Employees of Dundee Corp.’s capital markets division are quietly planning to take the dealer private, as its parent company grapples with a commodity rout that continues to erode profit.

The proposed management buyout of Dundee Capital Markets Inc. – using a partnership model that has largely fallen out of vogue – has been in the works for a while and may not be completed for months. The ultimate goal is to give top partners stakes in the investment bank, with Dundee Corp. retaining some ownership.

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Daily Deals: The math on Johnson-Tyco, Peter MacKay’s Bay St. address and rating the banks

ARON YEOMANSON

DEAL OF THE DAY:

Johnson Controls buys Tyco

In a deal valued at $16.5-billion (U.S.) , the U.S.-based manufacturer of car batteries and heating and ventilation equipment is acquiring its Ireland-based counterpart. The driving force behind the bid? You guessed it: A lower tax bill.

The combined company will be able to keep an estimated $150-million a year away from the tax man simply by putting down roots in the relatively tax-friendly domicile of Cork, Ireland.

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Scotiabank adds technology talent with latest board appointment

DAVID BERMAN

Canadian banks are adding technology talent to their boards of directors as they become increasingly serious about the threats and opportunities posed by financial technology, or fintech, firms.

Bank of Nova Scotia announced on Monday that it had appointed to its board Scott Bonham, a Canadian entrepreneur and venture capitalist with “deep connections” to Silicon Valley, according to the bank’s release.

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Former OSC chair Howard Wetston appointed senior fellow at C.D. Howe

JANET McFARLAND

Former Ontario Securities Commission chair Howard Wetston has been appointed a senior fellow at the C.D. Howe Institute, a Toronto-based research organization.

Mr. Wetston, 68, left the OSC in November after a six-year term heading Canada’s largest securities regulator, and said in an interview at the time that he wanted to find “new experiences.”

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TD Bank keeps a stubborn hold on home, auto insurance

JACQUELINE NELSON

The challenging business of insuring homes and cars just got lonelier for Toronto-Dominion Bank.

TD will be the last of the major lenders still underwriting property and casualty (P&C) policies, now that Royal Bank of Canada has struck a $582-million deal with Aviva Canada to part ways with its home and auto insurance business. National Bank of Canada is still technically in the game, but it doesn’t crack the top-20 providers by market share. TD is in the top five.

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Weekly Deals: RBC’s insurance move and a big garbage merger

NIALL McGEE

DEAL OF THE WEEK

RBC sells insurance unit to Aviva for $582-million

Royal Bank of Canada is selling off some of its insurance business to a larger competitor in a move to offer customers more coverage while reducing risk.

Aviva Canada Inc. is acquiring an RBC division of home and auto insurance through a $582-million deal for RBC General Insurance Co. About 575 employees from RBC Insurance that handle underwriting, adjudicating claims and other activities will become part of Aviva under the agreement.

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