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Streetwise

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

Scotiabank CEO gets 26% pay hike in first year

DAVID BERMAN

In his first year as Bank of Nova Scotia’s chief executive, Brian Porter received a 26-per-cent boost in pay – but his compensation remains well below that of Scotiabank’s previous chief executive, Rick Waugh.

According to a proxy filing released on Thursday, Mr. Porter received nearly $8.9-million in 2014 – which includes a base salary of $1-million, an incentive award and deferred compensation – up from total compensation of just over $7-million in 2013, when he served as president.

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Encana’s $1.25-billion financing sells quickly

TIM KILADZE

Investment bankers are breathing a bit easier Thursday morning. The latest big deal to hit Bay Street has been fully sold.

A flurry of large share sales have been launched over the past few weeks, and their success rates are mixed. Some flew off the shelves, some took time to sell, some are still sore spots. So every time a new one arrives, the underwriters aren’t quite sure of what to expect.

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The price of control: why Arcan debt holders took a haircut

ADRIAN MYERS

Mozart’s Requiem, Antoni Gaudi’s Sagrada Familla, David Foster Wallace’s Pale King, my story about the dispute between shareholders and debt investors at junior energy company Arcan Resources Ltd. While I’d like to say that the common thread between these four things is that they are all triumphant works, the real link between all of them is that they were unfinished.

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Great-West to build on British growth with acquisition

JACQUELINE NELSON

Great-West Lifeco Inc.’s acquisition of assets from the world’s oldest mutual life assurance company paves the way for further expansion in Britain, the insurer’s chief executive said.

Winnipeg-based Great-West said Tuesday that it would take on the annuity business of Equitable Life Assurance Society, an investment and pensions company – a portfolio of about 31,000 policies with assets and liabilities worth about $1.69-billion. In addition to increasing the total assets Great-West manages, it also expands its market presence in Britain

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HOOPP’s returns defy market trends

JACQUELINE NELSON

Nothing sticks to The Healthcare of Ontario Pension Plan. Market conditions that make trouble for others roll off the back of the 40-year-old plan.

That might be because HOOPP, which supports Ontario health care workers, doesn’t invest like many other large pension funds in Canada.

The pension plan earned a 17.7 per cent return on its portfolio in 2014 – higher than peers such as Ontario Municipal Employees Retirement System’s 10 per cent return and La Caisse de dépôt et placement du Québec‘s 12 per cent return – and unlike its fellow pension administrators, it isn’t planning any big investment moves in the coming year.

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Memo to Bay Street: tread carefully with resource deals

TIM KILADZE

Add Silver Wheaton Corp. to the growing list of large resource deals that struggle to sell.

Since the streaming mining royalties company launched a large $800-million (U.S.) bought deal on Monday, its shares have dropped roughly four per cent and buyers remain skittish, according to someone familiar with the deal.

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OSC says no decision on trailer fees until 2016

NIALL McGEE

The Ontario Securities Commission says a decision on whether to ban trailer fees on mutual funds won’t be coming this year.

In a report entitled “Trailer fees – the meteor is closer than you think,” published in the fall of 2014, CIBC analysts Robert Sedran and Paul Holden wrote that a recommendation from regulators on whether to ban trailer fees on mutual funds was expected in early 2015.

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Mining lawyer joins Gowlings

JEFF GRAY

Gowling Lafleur Henderson LLP continues to attract new talent, announcing Tuesday that it had snagged mining lawyer France Tenaille from Cassels Brock & Blackwell LLP.

Ms. Tenaille, a Spanish speaker who has practised law in Venezuela and specializes in private mergers-and-acquisitions and project finance in the Latin American mining business, joins Gowlings’ Toronto office as a partner.

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Volatility to fuel Canadian private equity firms in 2015

NIALL McGEE

Far from scaring off Canadian private equity firms, volatility in the stock market this year will act as fuel for PE deal making. That’s according to a new report by Citigroup Inc. and Mergermarket entitled “Charting the course: The future of Canadian M&A in volatile markets.”

“Although there is a lot of volatility in the market, that won’t cause private equity firms to stay on the sidelines.” said Grant Kernaghan, managing director, Canadian investment banking, with Citi in a telephone interview.

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Franco-Nevada CEO: ‘This is a great time to buy’

RACHELLE YOUNGLAI

Franco-Nevada Corp.’s chief executive told hundreds of cash-starved mining companies that for asset purchases, there’s no time like the present.

“Right now we’re buying as much as we can,” David Harquail told miners Tuesday at the Prospectors and Developers Association of Canada conference in Toronto. “This is a great time to buy assets. Everything is for sale.”

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Well-known Cormark research analyst to start new venture

TIM KILADZE

A long-time research analyst is moving on to something new.

David Newman, who has worked in equity research for nearly two decades, left Cormark Securities this week. During his career he covered a range of industries including consumer products and special situations, but is arguably best known for his recent work on industrial products and transportation companies, such as Air Canada.

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Sun Life to take on $5-billion BCE pension risk

JACQUELINE NELSON

BCE Inc. has struck a deal to transfer $5-billion in pension risk over to Sun Life Financial Inc.

Under the agreement, the media and telecom giant will transfer the longevity risk in its pension plan – the likelihood that pensioners will live longer – over to the insurance company.

Each month, the Bell Canada Pension Plan will pay premiums to Sun Life. At the same time, Sun Life will take over making the required pension payments to existing pensioners, and will continue to do so during their lifetimes. The companies say the arrangement is the first of its kind in North America.

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Yamana Gold could take Brazil subsidiary public in 2015

RACHELLE YOUNGLAI

Will the second time be the charm for Yamana Gold Inc.’s attempts to sell its Brazilian assets?

The Toronto-based miner tried to sell some of its Brazilian mines last year, only to yank them from the market when the company could not get the price it was looking for.

Yamana then created a wholly-owned subsidiary with some of those unsold Brazilian mines and asked long-time Canadian miner Gil Clausen and his team to run the unit.

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Horizons appoints co-CEOs

CLARE O'HARA

Horizons ETFs Management (Canada) Inc. has announced two new leaders will take over the helm for the exchange traded funds (ETFs) provider.

Taeyong Lee, Horizon’s executive chairman and Steven Hawkins, Horizon’s chief investment officer, will assume the roles of co-chief executive officers of Horizons ETFs.

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Can we call a truce in the trader-TMX war?

TIM KILADZE

A war of words is bubbling up on Bay Street between disgruntled traders and the country’s all-powerful stock exchange. In the name of good Canadian manners, it’s best we take a timeout before it boils over.

Once again, a growing number of sell-side traders are furious with TMX Group Ltd., which runs the Toronto Stock Exchange. The last time we saw such animosity was just before the financial crisis, when many of the same players were incensed over the TSX’s effective monopoly, arguing it gave the company free rein to charge ludicrous transaction fees.

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Choosy Silver Wheaton moves in on quality gold mine

JACQUELINE NELSON

Silver Wheaton Corp. heard the call for for capital coming from mining companies of all sorts, and now it’s stepping in to help.

Last summer, Randy Smallwood, the royalty streaming company’s chief executive officer, said more miners were looking for alternative ways to finance their operations. Silver Wheaton buys royalties and streams of future silver (and sometimes gold) production from large miners. In many cases these big firms can’t raise funds through new equity, so they turn to companies like Silver Wheaton to help fund operations immediately.

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Small miners search for capital as private-equity mining deals slip

RACHELLE YOUNGLAI

Private-equity interest in mining companies has waned, leaving a handful of players to pick through the debris.

For two years, private equity was all the rage as the mining industry got hit hard by the plummeting commodity prices. Traditional private-equity firms were looking for distressed assets. Bankers and others tried to establish private-equity shops.

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Canadian FX rainmaker starts new company

TIM KILADZE

Free from the constraints of his non-compete agreement, Peter Gustavson is diving back into the foreign exchange market.

Five years after selling his FX giant, Custom House Ltd., to Western Union for $370-million (U.S.), Mr. Gustavson has wrangled some members of his old team to start a new venture.

Until now, the entrepreneur was limited in what he could do because of contractual obligations he made with Western Union. In the meantime, he started a venture capital fund and donated $10-million to the University of Victoria, which renamed its business school the Peter B. Gustavson School of Business.

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Capital markets still showing signs of life despite oil patch woes

JEFFREY JONES

A handful of energy companies have enticed investors with share issues, even as the oil patch faces tough times.

In Canada, producers have raised more than $2.1-billion in equity financing since the start of the year, with Cenovus Energy Inc.’s bought deal last week accounting for the lion’s share. That is more than double what the sector raised in the last big drop in activity, in the first three months of 2013, when U.S. benchmark crude averaged more than $95 (U.S.) a barrel.

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Why Canadian banks are racking up trading wins

DAVID BERMAN

The first-quarter reporting season for the Big Six banks hasn’t concluded yet – five down, one to go – but an interesting trend has emerged. Banks are killing it on trading.

Royal Bank of Canada reported trading revenue of $855-million in the first quarter, a near-17 per cent leap over the first quarter of 2014. It’s also up a whopping 118 per cent over the fourth quarter, but that was an unusual quarter because trading revenue was affected by changes associated with compliance to the U.S.’ so-called ‘Volcker rule’ on proprietary trading.

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Avigilon opens its wallet for patent, real estate acquisitions

SEAN SILCOFF

Fast-growing Vancouver tech company Avigilon Corp. has been buying a lot of property of late – both intellectual and physical.

In December and January, the network video and surveillance technology company plunked down $93-million in a pair or transactions to pick up 172 patents and 75 patent applications. Now, it has agreed to pay $42-million for a nine-storey building at 555 Robson Street in Vancouver that will serve as its global headquarters.

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OMERS sets its sights on infrastructure

JACQUELINE NELSON

Stable infrastructure investments are beckoning to Ontario Municipal Employees Retirement System, and the pension fund is willing to pay the price for quality assets.

The pension plan for Ontario municipal employees said it wants to boost its exposure to infrastructure from 14.7-per cent as of its 2014 year, to 21.5 per cent of its total portfolio in the next few years.

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Stikeman Elliott snags M&A lawyer

NIALL McGEE

Mario Nigro, a long-time mergers and acquisitions lawyer with Blake, Cassels & Graydon LLP, has joined Stikeman Elliott LLP, as partner in the M&A and private equity group.

“He literally started this morning. His office – It looks like he’s been here for 10 years already. He’s got his espresso machine going and he’s just raring to go,” said Jay Kellerman, partner with Stikeman Elliott in a telephone interview.

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Laurentian, Manulife executives changing roles

CLARE O’HARA

Two financial services industry executives are moving into new leadership roles.

François Desjardins, president and CEO of B2B Bank, has taken on the role of as chief operating officer at B2B’s parent company, Laurentian Bank of Canada. Laurentian Bank’s Board of Directors also announced its intention to name Mr. Desjardins president and CEO of the Bank effective November 1, 2015.

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Reality check on HBC’s big deal: Does it really create value?

TIM KILADZE

You can often tell when corporate leaders are excited by measuring their volume of buzzwords – the more they use, the merrier they typically are.

Following this rule of thumb, Hudson’s Bay Co. governor Richard Baker was practically ecstatic when announcing his new real estate projects earlier this week. In his words, the deals are a “transformative step” that will undoubtedly “drive value creation.”

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Costs forcing smaller financial dealers into arms of larger rivals

CLARE O’HARA

Increased costs and regulatory pressures are driving more consolidation in the financial services industry, with a number of smaller dealer firms being forced to either exit the industry or merge with larger forces to survive.

As a result of continued weak capital markets activity and low interest rates, and increased regulatory compliance costs, the industry could see further consolidation among small investment firms, says Ian Russell, president and CEO of the Investment Industry Association of Canada (IIAC).

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Another former income trust shakes hands with the taxman

SEAN SILCOFF

Another former income trust has settled with Canada Revenue Agency over the tax consequences of its conversion to a corporation. Ag Growth International Inc., a grain handling equipment maker that converted in June, 2009, said it has entered into an agreement with CRA that “will not give rise to any cash outlay” but will result in a non-cash charge as it writes down the the value of its deferred tax assets.

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Former Devon Canada boss joins ARC Financial

JEFFREY JONES

The former head of Devon Energy Corp.’s Canadian operation has signed on with ARC Financial Corp., the Calgary-based private-equity firm, as a senior adviser.

Chris Seasons will work with ARC’s investment committee and board of directors on searching for new deals, as well as contributing to overall strategy and operations, the firm said.

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Insurers struggle to court millennials

JACQUELINE NELSON

The way younger Canadians research and buy insurance is changing and that’s going to require a major shift from the companies that serve them, a new report says.

Traditional insurance products are not well suited to meeting the needs of Generations X and Y, or middle-class families, according to an outlook report on the Canadian life insurance and annuity business released by consulting firm Ernst & Young LLP on Wednesday.

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TransCanada sells stake in U.S. gas pipeline network

JEFFREY JONES

TransCanada Corp. is making good on its pledge to keep selling assets to a U.S. affiliate to help fund $46-billion in expansion plans, even after an activist investor abandoned a campaign for a much bigger shakeup.

TransCanada is selling its remaining 30-per-cent stake in Gas Transmission Northwest LLC, a U.S. gas pipeline network, to master limited partnership TC Pipelines LP in a so-called “drop down” transaction.

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