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Streetwise

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

Canadian insurers see opportunity in looser India investment rules

JACQUELINE NELSON

The new government in India is planning to allow more foreign investment in the insurance market, an effort to boost the industry that could lead to opportunities for some of Canada’s largest players.

The government plans to increase the cap on foreign investment to 49 per cent from 26 per cent. This means insurers still won’t be able to take total control of the companies, but could invest deeper in the region alongside local partners.

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Behind the facade of Canadian housing

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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The big Canadian tech hope that wasn’t – yet

TIM KILADZE

You know there’s sufficient buzz about a burgeoning Canadian company when the investment banks start circling. Eager to eventually win investment banking business, the dealers initiate research coverage to signal to management that they’ve been there from the early days.

This very scenario is currently playing out with Ottawa-based DragonWave Inc., a tech infrastructure company with a market value of just $145-million. Although profits have yet to materialize, there is hope that DragonWave will make a major global mark, ultimately offering up juicy banking fees and create another Canadian tech success story in the process.

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Parex surges as Colombian reserves beat expectations

JEFFREY JONES

Parex Resources Inc. is making a habit of reporting hefty jumps in Colombian oil reserves each July.

The Calgary-based company beat expectations for the second time in as many years with data showing an 80 per cent increase in proved plus probable reserves in six months to 58 million barrels of oil equivalent.

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Tuckamore buys time as dissident votes grow

JACQUELINE NELSON

Tuckamore Capital Management Inc. is postponing a special meeting of shareholders as opponents to its proposed buyout deal appear to be gaining strength.

Tuckamore’s management is attempting to privatize the company in a 75-cent-a-share management-led buyout in a partnership with private equity firm Birch Hill. But it has been challenged by a group of shareholders who have demanded a higher price.

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Oil patch enjoying IPO revival

JEFFREY JONES

The oil patch has become fertile ground again for initial public offerings.

This time around, a few notable trends have emerged, including companies building larger production bases before going public.

Such is the case with the next Calgary-based producer set for an IPO, Northern Blizzard Resource Inc., which gained a large operating base in 2010 when it paid $975-million for heavy oil assets from Nexen Energy Inc.

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Another banking crisis? Not so fast

TIM KILADZE

The euro zone recovery was just starting to seem like smooth sailing. How quickly the fears came roaring back.

For more than a year the euro zone financial system has barely been talked about, and any flare-ups, like the bank run in Cyprus, were quickly forgotten. Then came Thursday’s panic.

After plummeting more than 50 per cent since the start of April, Banco Espirito Santo, Portugal’s second largest bank by assets lost 17 per cent Thursday, prompting the country’s regulator to halt the shares. Immediately there were fears that a new European banking crisis was brewing and stock markets across the continent took a hit. Without knowing any facts, it’s easy to assume the new woes are contagious to other lenders.

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BMO ramps up search for female advisers online

JACQUELINE NELSON

Female financial advisers are a hot commodity among wealth and asset management companies seeking more female clients, and one bank’s capital markets business is turning online to recruit new candidates.

BMO Nesbitt Burns is reaching out to prospective employees with a new Web page aimed at attracting female investment advisers to guide clients on their investments, financial and planning and philanthropy, among other things.

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Fipke sells last stake in Ekati diamond mine

ANNA NICOLAOU

Legendary multimillionaire geologist Charles “Chuck” Fipke has sold his remaining stake in Ekati, the first-ever Canadian diamond mine he discovered two decades ago in the Arctic tundra of the Northwest Territories.

The native Albertan sold his 10 per cent interest to Dominion Diamond Corp. for a total of $67-million (U.S.). Dr. Stewart Blusson, with whom Mr. Fipke famously travelled through the barren Arctic for several years before they discovered Canada’s diamonds and sparked a huge staking rush in the 1990s, holds the remaining 10 per cent interest.

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Private equity firms muscling in on Canadian banks’ commercial lending

TIM KILADZE

A growing roster of private equity firms hoping to buy or lend to small and mid-sized Canadian companies has the country’s biggest banks on edge, forcing them to reassess their long-standing commercial banking strategies out of fears of getting left behind.

Canada’s banks developed their commercial banking arms over decades by lending to companies that typically generate annual revenue of $50-million or less, nurturing scores of client relationships. Since the financial crisis, however, private equity firms have been scooping up smaller companies, shaking up their historical banking relationships.

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A new way to invest in companies led by women

JANET McFARLAND

Barclays PLC is capitalizing on investor interest in women in leadership roles with a new product that will follow the performance of major U.S. companies with female CEOs or directors.

Barclays has created an index of 85 companies that either have female CEOs or have at least 25-per-cent female directors on the board, and will issue Barclays Women in Leadership exchange-traded notes to track the index. The notes will begin trading Thursday on the NYSE Arca Exchange (ticker WIL).

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Access vs. Tuckamore: When winning the PR battle matters

ADRIAN MYERS

In the fog of proxy-war propaganda, it’s important not to confuse a winning public relations strategy with a winning legal one.

As PR scraps go, it’s hard to top Access Holdings Management Co. LLC’s fight against Tuckamore Capital Management Inc.’s management-led, private equity-backed buyout. We have seen private e-mails released, a libel lawsuit and a complaint filed with the Ontario Securities Commission, all chronicled by press releases filled with accusation and innuendo. For all that, it doesn’t seem like Access has many victorious legal arguments.

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Young litigators shopping for boutique law firms

JEFF GRAY

With Joanna Nairn’s résumé, a young litigator could have her pick of law firms.

Originally from Waterloo, Ont., the 29-year-old worked in Washington D.C. at O’Melveny & Myers LLP, got her law degree from Harvard University and clerked for the now-retired Justice Morris Fish at the Supreme Court of Canada.

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RBC Asset Management replaces head trader

BOYD ERMAN

Royal Bank of Canada’s asset management division, one of the largest mutual fund groups in Canada, has parted ways with its head equity trader.

Darryl Noronha, the long-time head trader at RBC Global Asset Management, is no longer with the firm effective Wednesday, a spokeswoman for RBC confirmed. Jason Melo will take on the role.

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Former Teachers deal maker Silvestri finds new home

BOYD ERMAN

Former Ontario Teachers’ Pension Plan deal maker Glen Silvestri has a new job, joining Toronto private equity firm Imperial Capital as a partner.

Mr. Silvestri departed about a year ago from Ontario Teachers, where he ran the technology, media and telecommunications group for the pension fund’s private equity division. He was probably best known as the Teachers’ point man on Maple Leaf Sports & Entertainment when the pension fund owned a big chunk of the sports franchise manager.

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Couche-Tard has ammo for acquisitions, and CEO is looking to buy

TIM KILADZE

Just two years after its blockbuster European acquisition, Alimentation Couche-Tard Inc. is actively looking for new deals.

After the company reported quarterly earnings Monday, chief executive officer Alain Bouchard told analysts he believes the company is “in a good position to materialize potential opportunities” – management-speak for ‘hunting for deals.’ The root of this rekindled acquisition strategy: a better-looking balance sheet.

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Spartan Energy deal momentum continues

JEFFREY JONES CALGARY

Spartan Energy Corp. remains active on the deal front.

Fresh from closing a $98-million acquisition of southeast Saskatchewan light oil properties from Lightstream Resources Ltd., Spartan has shelled out another $17-million for oil properties in the province.

It also said it is listing its shares on the Toronto Stock Exchange, moving up from the small-cap TSX Venture Exchange.

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A big step in Ottawa’s plan to get a fourth wireless carrier

Boyd Erman

The federal government’s latest strategy to foment competition in wireless at first brings to mind Albert Einstein’s famous definition of insanity – doing the same thing over and over again and expecting different results.

The government on Monday announced it would set aside valuable spectrum for mobile phones that could only be purchased by a company that wants to compete with the big three in the wireless business: BCE Inc., Rogers Communications Inc. and Telus Corp. That had echoes of the government’s 2008 spectrum auction, which set aside spectrum for new entrants. That spectrum was eventually purchased by Mobilicity and Wind Mobile, which are now struggling to make a go of it.

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Karkkainen backing off from day-to-day operations at Kern Partners

JEFFREY JONES

Pentti Karkkainen is taking a step back from day-to-day operations at Kern Partners Ltd., the energy-focused private equity firm he co-founded, to sit on the firm’s independent advisory board.

Calgary-based Kern, with $1.1-billion under direct management and $1.5-billion in its co-investment management program, said Mr. Karkkainen will remain on the boards of directors of many of the companies in its portfolio.

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Bank trading revenues expected to show another big gain in quarter

ANNA NICOLAOU

Let the good times roll for another quarter for the big six Canadian banks.

That’s the preliminary stance from National Bank Financial’s latest projections for third-quarter trading revenues. NBF expects Canada’s largest lenders, known as the Big Six, to report third-quarter trading revenues in the neighbourhood of $2.5-billion, a 7-per-cent quarterly rise, which would also be the 11th successive quarter of revenues between $2-billion and $2.5-billion. This all comes at a time when large trading desks across the globe have seen declines in trading profits, as low interest rates and dwindling volatility have squeezed returns.

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Resignations cloud Sunshine Oilsands’ future

JEFFREY JONES

The future of Sunshine Oilsands Ltd., the struggling Alberta bitumen developer, has become cloudier with the resignation of two directors, including the company’s founder.

Sunshine, which is backed by a large group of Chinese investors, said Songning Shen and Wazir Chand Seth resigned from the board effective Monday. Their exits follow those of former chief executive John Zahary and chief financial officer Robert Pearce in December.

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Retail investors nearly wiped out as REIT saga ends

TIM KILADZE

The sad, drawn out saga of League Assets Corp.’s demise is finally nearing its end, and the result is rather ugly for thousands of Canadian investors.

League, which operated IGW REIT, one of the country’s largest private real estate investment trusts, filed for bankruptcy protection in October and its inner workings were so convoluted that it took eight months to determine where all its money went, and how much investors would get back.

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Difference Capital back to sparring with Benev Capital

JACQUELINE NELSON

Just when it appeared the tensions between investor Difference Capital Financial Inc. and Benev Capital Inc. had cooled, there’s yet another conflict over the management of the former contaminated soil processor that is trying to be a new kind of company.

Difference Capital, run by Michael Wekerle, is Benev’s largest shareholder with a stake of more than 28 per cent. It has been at odds with Benev since the company’s management began to move in a new direction following years of instability. The new plan involves using existing capital to buy royalties from Canadian businesses and franchisors.

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OMERS’ Rick Byers eyes Ontario Tory leadership

BOYD ERMAN

Pension fund OMERS may be short an infrastructure executive if Rick Byers is successful in an attempt to become the next leader of Ontario’s Progressive Conservative party.

Mr. Byers confirmed that he is looking at running, which would bring him back into politics after a few years on the sidelines doing deals at OMERS Borealis arm.

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Auxo makes first exit by Canadian search fund

BOYD ERMAN

The Canadian search fund business has hit a new milestone – the first exit.

After fielding many buyout offers for their Canadian security company, the fund managers at Auxo Management LP instead decided on a recap and sale of a minority stake in portfolio company UCIT Online Security.

Auxo is one of a number of search funds in Canada. The funds are a different model of private equity, in which the investors focus on a smaller number of companies and get more deeply involved in management than in a more traditional private equity model. (Read more about the growing phenomenon here.) There was significant interest in UCIT from U.S. private equity funds, Auxo founder Erik Mikkelsen said in an e-mail. However, the recap allowed most of the investors who had backed Auxo to remain involved with Auxo, putting in money at a new, higher valuation. New York-based private equity firm Egis Capital Partners came in to buy a minority stake.

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U.S. biotech company opens third Canadian incubator

BOYD ERMAN

U.S. biotechnology investor Versant Ventures is expecting big things from Canada in drug discovery, opening a third incubator in this country to try to find promising early stage therapies to sell to major pharmaceutical companies.

Versant’s strategy is not the standard way of investing in early stage companies. In that model, when the companies buy the company that has made the discovery, the scientists go with the company to its new owner. What’s more, sales can take a long time. Instead, Versant partners with scientists in its incubators to create drug programs that can be sold as they reach a promising milestone. When the drug development is sold, the scientists remain at the incubators working on the next discovery.

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Atco and AltaLink clash over power line deal

JACQUELINE NELSON

The debate over who should control Alberta’s “critical infrastructure” is kicking up nearly as much dust as the Calgary Stampede this year.

Companies, governments and public policy specialists are all weighing in on the role of foreign private investment in the province’s energy infrastructure, a discussion that spurred on by Berkshire Hathaway Energy’s $3.2-billion deal for AltaLink LP, operator of more than 80 per cent of the province’s power lines. The utilities division of famed investor Warren Buffett’s Berkshire Hathaway Inc. struck a deal for the company with SNC-Lavalin Group Inc. in May, but the transaction has yet to close.

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What’s French for ‘car pooling’?

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.

More »

Fasken Martineau hires new partner for mining team

BOYD ERMAN

Mining has been the outlier in an otherwise busy deals market, but there's a sense of optimism that the quiet times can't last.

Against that backdrop, law firm Fasken Martineau is adding to its mining team by hiring Alison Lacy, formerly of Torys LLP. Faskens has long had a strong specialty in international mining, and Ms. Lacy will be a partner in the firm's global mining group. In case the mining business does stay sleepy, she has experience in areas such as alternative energy and the electricity sector.

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Petroamerica dealt a blow by proxy advisers

ANNA NICOLAOU

Merger and acquisition activity continues to intensify this summer, and Suroco Energy is a perfect example.

Over the past several weeks, two junior Calgary-based energy companies have stoked a proxy feud as Suroco Energy, a Colombia-focused oil and gas company, faces a bidding war for control of its shares. Suroco shareholders are now being urged to reject an acquisition offer from Petroamerica Oil Corp., defying the wishes of Suroco’s board of directors.

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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.

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Tim Kiladze

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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 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 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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