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Streetwise

News and analysis on Bay Street and the world of finance
available exclusively to subscribers of Globe Unlimited

Entry archive:

Retail-investor advocate seeks greater independence

JANET McFARLAND

Canada’s main organization representing small investors is launching a fundraising campaign to become self-supporting and independent of the regulators it lobbies for reforms.

Montreal billionaire Stephen Jarislowsky has already committed $2-million to launch a new endowment fund for the Canadian Foundation for the Advancement of Investor Rights – known as FAIR Canada – but his pledge is conditional on FAIR raising a further $4-million this year to match his donation on a 2-to-1 basis.

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IIROC expands study of high-frequency trading impact

JACQUELINE NELSON

Canada’s brokerage industry regulator is nearing the end of its high-frequency trading (HFT) study, assigning two research groups to measure the effect of these trades on the market.

The Investment Industry Regulatory Organization of Canada (IIROC) has assembled two groups of professors with international HFT experience to look into this hot topic. This move follows its 2012 report on the activity of traders, analyzing the activities of those who use technology to buy and sell shares in milliseconds.

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Canadian hedge fund returns lag TSX in first quarter

TIM KILADZE

Canadians with money invested in domestic hedge funds would have been better off in the first quarter buying a passive fund that tracks the S&P/TSX composite index.

From January to March, Canadian hedge funds earned an average of 3.96 per cent, according to Bank of Nova Scotia’s Canadian Hedge Fund Index. The TSX benchmark, meanwhile, earned 5.24 per cent.

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A Valeant effort: Growing drug maker can’t stop buying

TIM KILADZE

Don’t be discouraged if you have trouble determining Valeant Pharmaceuticals International Inc.’s true value. The drug maker’s acquisition pace makes it almost impossible to peg.

Since Valeant tied up with Biovail Corp. in 2010, the company has embarked on an ambitious acquisition spree, striking 21 deals worth more than $14-billion in a little over three years. Every time shareholders get a chance to catch a breather and assess the future, management goes hunting again. Now the executive team wants to team up with Bill Ackman on a brand new $47-billion deal.

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Osler picks up infrastructure lawyer from McMillan

JEFF GRAY

McMillan LLP has lost a lawyer from a prominent practice group that concentrates on infrastructure financing and public-private partnerships – a growth area in recent years as governments grow increasingly comfortable with so-called P3s to build megaprojects.

The firm’s Chris Bennett has left for Osler Hoskin & Harcourt LLP, where he will head his new firm’s project finance group in Toronto. Osler announced the move on Tuesday. Mr. Bennett has acted for clients involved involved in the financing for many major infrastructure projects, including hospitals, schools and roads.

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Canadian REITs finally showing signs of life

TIM KILADZE

Nearly a year after Canadian real estate investment trusts’ values were in free-fall, the sector is finally seeing a resurgence.

Almost four full months into 2014, industry stalwarts such as RioCan REIT have seen their their values jump more than 10 per cent, and certain trusts are finally tapping the markets again for new funds.

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Barrick must check its hubris to achieve a smooth Newmont merger

BOYD ERMAN

Barrick Gold Corp. says its strategy is no longer about bigger, but about better. A successful merger with Newmont Mining Corp. has got to be about a bit of both.

Barrick is not talking yet, as no deal is done, but job one when a transaction is finalized will be to explain just how a combination with Newmont would square with Barrick’s new strategy.

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Co-founders bid farewell to former tech darling

TIM KILADZE

Nearly four years since going public in a $660-million (U.S.) deal, the husband and wife duo who built Calgary’s Smart Technologies Inc. from scratch no longer have a hand in any of the company’s day-to-day decision making.

Effective immediately, David Martin and Nancy Knowlton have resigned their board seats, a move that comes two years after Ms. Knowlton first stepped down as the company’s chief executive officer.

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Israel’s top REIT says North America ‘fully priced’

TARA PERKINS

North American real estate is “fully priced” and there are “no more big opportunities,” says Chaim Katzman, the chairman of Gazit-Globe Ltd.

Gazit-Globe, Israel’s largest real estate investment trust, has been trading on the Toronto Stock Exchange since October. The 32-year-old company bills itself as one of the largest owners and operators of supermarket-anchored shopping centres in the world.

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Barrick and Newmont: Wounded warriors running out of options

TIM KILADZE

Three years ago the merger of Barrick Gold Corp. and Newmont Mining Corp. would have created a bullion behemoth worth marvelling over.

Today the proposed combination looks more like two wounded warriors working together to find the helicopter that will airlift them out of battle.

Barrick’s woes have been analyzed to death here in Canada. The gold giant had too much debt, too many far-flung assets, and too many capital expenditures to withstand a sudden gold price correction.

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Will that be cash, or Facebank?

Every day ROB Insight delivers exclusive analysis on breaking business news and market-moving events. Streetwise offers news and analysis on Bay Street and the world of finance. Inside the Market delivers up-to-the-minute insights on market news as it develops.

Here are our editors’ picks of some of the best reads available to Globe Unlimited subscribers this week.

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Agnico CEO says decision to bid for Osisko is ‘unique’

RACHELLE YOUNGLAI

Agnico Eagle Mines Ltd. surprised the market when it teamed up with Yamana Gold Inc. to make a $3.9-billion bid for Osisko Mining Corp.

Although Osisko is a natural fit for Agnico because its Quebec mines sit along the same highway as Osisko’s only mine, the company has traditionally bought projects that needed to be developed.

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Sirius XM debt demand could fund special dividend

JACQUELINE NELSON

Sirius XM Canada Holdings Inc. has completed an oversubscribed debt offering worth $200-million that could lead to a special dividend for shareholders.

The Toronto-based communications company said favourable market conditions were behind the decision to refinance its senior notes back when it reported earnings on April 14. It planned to redeem $130.7-million of debt that paid a 9.75-per-cent coupon, and take on another $150-million at a lower interest rate.

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HudBay’s challenge tests rules on poison pills

BOYD ERMAN

The debate over the poison pill that protects Augusta Resource Corp. from a hostile takeover bid by HudBay Minerals Inc. – for now – will be the first big test of a new set of proposed rules on such anti-takeover protections.

Last year, facing a number of seemingly contradictory rulings from various provincial securities regulators, the regulators came together and crafted a proposed rule to unify treatment of poison pillls. The upshot of the new rules would allow pills to stand, rather than be thrown out, if they have been recently approved by a shareholder vote. The question is whether the British Columbia Securities Commission will take those rules into consideration even before they have been finalized.

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OSC gender-diversity proposal wins broad support

JANET McFARLAND

An array of business groups and corporate directors have thrown their support behind an Ontario Securities Commission proposal to require companies to disclose their gender diversity policies, and many are now urging the regulator to go even further to make the standards stricter.

Wednesday was the deadline for comments to be submitted to the commission about proposed new rules that would require all public companies that trade on the Toronto Stock Exchange to report annually on their approach to gender diversity for their boards and senior management ranks. The so-called “comply or explain” rules will require companies to disclose if they have diversity policies and internal targets for the proportion of women in senior roles, or else explain why they have opted not to have such policies.

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With crisis behind them, insurers mull new regulations

JACQUELINE NELSON

The world’s insurers are facing a new era of international regulation, a topic that will be front and centre when their leaders descend on Toronto in May.

Chief executive officers from global insurance companies that represent $15-trillion dollars (U.S.) in total assets, will meet to discuss their most pressing concerns at a summit organized by industry think tank the Geneva Association (GA). Among the issues on the table: A proposed increase in capital requirements aimed at protecting the businesses against future risk.

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Canadian crude still hot despite U.S. shale: BoC

TIM KILADZE

Canadian oil sands producers shouldn’t fret about the shale oil revolution unfolding south of the border. The Bank of Canada predicts their product will still be swooned over.

Since the shale oil supply started to skyrocket five years ago, soaring to three million barrels per day, there has been a growing fear that Canada’s heavy oil will be run out of favour because it is much more labour-and-capital-intensive to produce.

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Can Fairfax’s big bet in Greece match Irish payouts?

JACQUELINE NELSON

Fairfax Financial Holdings Ltd. has told investors it likes Greece, and on Tuesday made a big bet on the recovering nation. Now, investors may be hoping for some Irish luck.

Fairfax is part of a consortium that is propping up Greece’s third-largest lender with a €1.3-billion ($2-billion) investment. Eurobank Ergasias SA, which was bailed out by the Greek government’s Hellenic Financial Stability Fund, will issue new shares to these backers. They will collectively become the bank’s largest shareholder.

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Scotiabank’s executive team says goodbye, again

TIM KILADZE

Bank of Nova Scotia is losing another top executive. Chief operating officer and vice chairman Sabi Marwah – a highly respected veteran, and prankster, within the bank – is retiring at the end of May, capping off a 35-year career at the institution.

Mr. Marwah’s departure extends the growing list of executive changes at Scotiabank since Brian Porter replaced the retiring Rick Waugh as chief executive officer. Other changes in the past year include the departures of chief risk officer Rob Pitfield, marketing head Duncan Hannay and Scotia Capital co-head Steve McDonald.

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Orange’s next activist target: Newalta

BOYD ERMAN

Orange Capital LLC, the activist investor that successfully pushed for change at InnVest REIT, is looking to go two-for-two on successful Canadian campaigns in just a few months.

Newalta Corp. last week said that it was nominating two new directors after consulting with “certain major investors, including New York-based Orange Capital LLC, and respected their views” on board renewal.

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Private equity players pursue ‘Chuck E. Cheese for adults’

TIM KILADZE

You aren’t alone if your first reaction to the rumour that private equity players are circling arcade and restaurant chain Dave & Buster’s Inc. is one of confusion.

Dave & Buster’s, a U.S. chain with two Canadian locations, is often described as a grown-up version of Chuck E. Cheese. The chain offers arcade games and food – and most importantly, it serves alcohol.

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CPPIB closes deal, sells Australian commercial property

JANET McFARLAND

The Canada Pension Plan Investment Board has closed a large real estate deal in Australia and says it has already sold four of the properties it acquired, raising funds to reduce its required equity investment in the portfolio.

CPPIB has partnered with Dexus Property Group to buy an Australian property portfolio controlled by the Commonwealth Bank of Australia for about $3.7-billion (Australian) or about $3.8-billion (Canadian). The giant pension fund, which manages the assets of the Canada Pension Plan, said its 50-per-cent equity investment in the deal was $1.9-billion.

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Why Ottawa is raising mortgage insurance premiums

TARA PERKINS

Why are mortgage insurance premiums about to rise in Canada for the first time since the 1990s? The new guidelines that the country’s financial watchdog issued Monday offer some insight.

Banks are required to obtain insurance when they sell a mortgage to a customer who has a down-payment of less than 20 per cent. The mortgage insurance pays the bank back if the customer defaults on the loan. The insurance is there to protect the banks, but the banks almost always pass the cost of the insurance on to the customer.

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At BHP, the stars align for second run at Potash Corp.

BOYD ERMAN

A window is opening for BHP Billiton Ltd. to once again try a takeover of Potash Corp. of Saskatchewan.

Speculation is intense in the fertilizer industry that BHP may mount another campaign to win over Saskatoon-based Potash Corp. after being shot down in 2010. It failed the federal government’s murky “net benefit test” after a strong push from a Saskatchewan government that opposed the transaction.

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Callidus IPO increased amid hot demand

BOYD ERMAN

Another initial public offering has found a very receptive audience, as alternative lender Callidus Capital is now going to sell $250-million of stock after strong demand from investors.

Callidus is expected to announce the final pricing for the IPO later Monday. There was about $1.1-billion of demand for the transaction, allowing Callidus to increase the offering size from the original plan of $175-million to $250-million, said a person familiar with the sale.

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HudBay CEO disputes Augusta’s claims of rival bidders

RACHELLE YOUNGLAI

HudBay Minerals Inc. is asking Canadian regulators to get rid of Augusta Resource Corp.’s defense plan so that it can acquire Augusta’s copper project in Arizona.

HudBay already owns a 16 per cent stake in Augusta. But the Toronto-based company is blocked from acquiring more shares because Augusta adopted a shareholder rights plan, also known as a poison pill, when it found out HudBay had accumulated such a large position.

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Why CIBC must convey a clear-cut capital strategy

TIM KILADZE

Canadian Imperial Bank of Commerce executives must be exasperated.

Despite trouncing rival Canadian lenders on everything from core earnings growth to return on equity since the end of the credit crisis, CIBC’s shares still trade at a lower price-earnings multiple relative to other bank stocks.

This may seem like a petty issue. Who cares about a simple P/E multiple when your stock’s gained 22 per cent in the past year? But in the banking world, a fat multiple is a sign of sheer strength.

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Rajan rolls out red carpet for foreign banks in India

KEVIN CARMICHAEL

Canada’s banks generally have shied away from India. An onerous regulatory system and unfamiliar business culture always made a move into what is now the world’s 10th-largest economy something short of the slam-dunk investment that Bay Street’s famously cautious bankers like.

It may be time for them to take another look – if they aren’t doing so already. Raghuram Rajan, India’s central bank governor, is leading one of the most forceful efforts to overhaul the Indian banking system in the country’s history. He wants it known that outsiders are welcome.

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Energy borrowing booms in U.S., sparks new lending guidelines

TIM KILADZE

A boom in lending to energy companies in the United States has the country’s banking regulator worried that the meteoric rise will lead to loose underwriting standards.

Because the U.S. energy sector has exploded in recent years, driven by shale oil and gas production, banks are piling into the market. Heavyweights such as Bank of America Corp. and JPMorgan Chase & Co. have long lent to energy companies, and now their rivals are bulking up, with Associated Banc-Corp more than doubling its oil and gas portfolio in 2013 and Wells Fargo & Co. buying BNP Paribas SA’s energy lending business in 2012.

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Real Ventures closes half of $100-million fund

ANWAR ALI

Real Ventures thinks the time is right to give more emerging entrepreneurs a shot at success. They now have the cash do it: The Montreal-based early-stage venture capital investors have just closed the first half of what’s expected to be a new $100-million fund.

Teralys Capital, backed by Caisse de dépôt et placement du Québec, is injecting half of the $50-million that’s ready to invest. Fier Partners, the federal government (via its $400-million Venture Capital Action Plan announced in January 2013), Real’s founders and a number of undisclosed angel investors round out the other contributors.

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Boyd Erman

Boyd Erman is a long-time business journalist who has worked at Dow Jones, Bloomberg, and the National Post before joining the Globe and Mail.

Follow Boyd on Twitter @streetwiseblog

Tim Kiladze

Tim Kiladze is a business reporter with The Globe and Mail. Before crossing over to journalism, he worked in equity capital markets at National Bank Financial

Tara Perkins

Tara Perkins has been a business reporter since 2004, following a brief stint as overnight editor of globeandmail.com. She has been writing for the Globe's business section since the spring of 2007

Follow Tara on Twitter @taraperkins

Jacqueline Nelson

Jacqueline Nelson is a financial services reporter at the Report on Business.

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Jeff Gray

Jeff Gray covers legal affairs for The Report on Business. A former reporter and columnist at Toronto’s city hall, he has also worked for the BBC and reported for The Globe from London.

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Jeffrey Jones

Jeffrey Jones is a veteran journalist specializing in energy, finance and environment for The Globe and Mail’s Report on Business, based in Calgary.

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Janet McFarland

Janet specializes in reporting on corporate governance, compensation and securities industry regulation, and oversees the Globe's annual Board Games review of corporate governance practices of Canada's largest companies.

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Rita Trichur

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