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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:

Lexpert: Another lesson from the Ashley Madison hack

The Ashley Madison hacking scandal has a lesson for everyone. But the high-profile hack has a particular lesson for anyone contemplating a corporate merger or acquisition: Play down the importance of an information-technology due diligence at your peril.

When a company or investor has a target in its sites, the buyer generally expects to pay for a business due diligence that includes things like reviewing financial projections, contracts, agreements, pension and benefits obligations and tax structures.

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Avigilon stock falls after executive shakeup

NIALL McGEE

A new wave of management departures sent shares of Avigilon Corp. plunging Wednesday.

The Vancouver-based maker of high-definition surveillance cameras announced that chief operating officer Bryan Schmode had resigned. In addition, Avigilon said Collis Heath, formerly the company’s senior vice-president of global operations, had left the company.

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Wild markets are good for SPACs, bad for IPOs

NIALL McGEE

It’s arguably the most prosaic acronym in Canadian financial services, but the humble SPAC – which stands for special purpose acquisition corporation – has been one of the main propellers of the Canadian initial public offering (IPO) market in 2015.

SPACs have existed in the United States since the 1990s, but only popped up in Canada this year. Typically these blank-cheque, shell companies have two years to make an acquisition. Otherwise they must return their capital to shareholders.

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Daily Deal Roundup: First Mining buys Gold Canyon, PC Gold

SERES LU

DEAL OF THE DAY: First Mining bulks up

First Mining Finance Corp. has agreed to acquire all of the issued and outstanding common shares of Gold Canyon Resources Inc. and PC Gold Inc. Upon completion of the transaction, the former shareholders of Gold Canyon will hold approximately 55.4 per cent of the shares of the resulting company, former shareholders of PC Gold will hold approximately 9.6 per cent of the shares of the resulting company and the current shareholders of First Mining will hold approximately 35 per cent of the shares of the resulting company.

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K+S CFO to meet Toronto investors amid Potash bid

RACHELLE YOUNGLAI

K+S AG’s chief financial officer is due to meet investors in Toronto on Sept. 16 as the $8.7-billion (U.S.) bid from Potash Corp. of Saskatchewan Inc. simmers, according to a memo viewed by The Globe and Mail.

The mid-September trip to Toronto comes after K+S executives made the rounds with its European investors this summer.

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CentriLogic sets sights on big telcos with IT-outsourcing expansion

SEAN SILCOFF

CentriLogic Inc. has established itself as a company to watch in the data centre business after several years of blistering growth (it ranked 58th in Profit Magazine’s list of fastest-growing Canadian companies in 2014) and hiring two big-time executives last year, notably former BMO Nesbitt Burns Inc. investment banker Robert Levine as chief financial officer.

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Why Sprott snapped up star fund manager Dennis Mitchell

CLARE O’HARA

Sprott Asset Management is putting newly-hired portfolio manager Dennis Mitchell at the helm of its push to offer new investment products with a focus on global equities.

“We think we will have a very quick ramp with Dennis and he has very strong following across the country,” Sprott CEO John Wilson told The Globe and Mail. “Global equities is a category we feel is underserved on our platform and an area where Dennis can bring very meaningful business to us, in a very short period of time.”

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Daily Deal Roundup: OMERS explores bid for London City Airport

DUNCAN HOOD

DEAL OF THE DAY: Allianz and Borealis Infrastructure eye London City Airport

German insurer Allianz SE has joined Borealis Infrastructure, which manages investments for Canada’s Ontario Municipal Employees Retirement Systems (OMERS), to explore a bid for London City Airport, a source familiar with the process said. The news was first reported by the Telegraph, which said earlier this month that another Canadian pension fund, Ontario Teachers’ Pension Plan, has partnered with the sovereign wealth fund of Kuwait and Hermes Investment Management to submit an offer to the airport. Full story

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Financial services industry aiming to buff profile of CFA designation

JACQUELINE NELSON

For the CFA Institute, the string of letters that follow a financial adviser’s name are critical. The challenge is convincing investors to care.

The not-for-profit industry group that bestows the chartered financial analyst (CFA) designation is looking to boost standards of investment knowledge – and applicants to its program. But, since the financial crisis, investor skepticism and frustration have made that mission increasingly difficult.

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Best of the banks: The third-quarter scorecard

DAVID BERMAN

The big banks’ third-quarter results were strong, showing decent profit growth relative to the contracting economy and depressed energy sector. But were there standout results as you drilled down into the numbers from individual banks? You bet. Here’s a roundup of our best-of categories.

Best beat: Bank of Montreal, by 7.5 per cent.

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Signs point to major shake-up at Tembec

BERTRAND MAROTTE

Could Tembec Inc.’s days as an independent forest products company be numbered?

There’s certainly enough fresh timber for the rumour mill these days regarding the fate of the Montreal-based lumber, paper and specialty pulp producer.

The shares fell to penny-stock status recently after Standard & Poor’s revised its outlook for the company to negative from stable, and investor jitters ramped up on balance-sheet concerns.

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Neil Selfe’s next project: a ‘private-equity-like’ fund

NIALL McGEE

Neil Selfe doesn’t sit still for very long. The accountant, turned lawyer, turned investment banker, turned hedge fund entrepreneur, turned investment banker again, turned merchant bank founder, has had an eventful year. And we’re only two-thirds done.

In March, after an almost-nine-year run at GMP Capital Inc., he quit and founded Infor Financial Group Inc., a merchant bank and boutique advisory shop. Infor quickly landed lucrative advisory mandates with Element Financial Corp., including being the sole capital markets adviser on its $2-billion-plus stock sale in May. That same month, Mr. Selfe helped raise $230-million from investors for Infor Acquisition Corp., a special-purpose acquisition corporation (SPAC).

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Daily Deal Roundup: Brookfield’s $112-million India venture

SERES LU

DEAL OF THE DAY: Brookfield consortium invests more than $112-million in India

Canada’s Brookfield Asset Management Inc. made its first significant investment in Indian infrastructure, buying six road and three power projects on Friday from India’s Gammon Infrastructure Projects Ltd. A consortium composed of Brookfield and Core Infrastructure India Fund Pte. Ltd. is buying the projects, six of which are operational. The deal includes an immediate cash payment of 5.63 billion rupees ($112-million) and future undisclosed sums based on certain performance targets being met. Full story

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Why the rise of fintech startups has Canada’s big banks on edge

SEAN SILCOFF

Canada’s big banks have sailed through earnings season reporting better-than-expected results despite concerns about the global economy, slumping commodities prices and the overheated domestic housing market. But could even bigger threats to the banks loom from a band of scrappy high-tech startups?

You may have heard the term “fintech” recently; expect to hear it a lot more in the future. The loose definition refers to firms that are looking to leverage software and the Internet to bring new efficiencies and competition to the financial services sector, and there are a lot of them.

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Daily Deal Roundup: Canadians among bidders in $12-billion Australia energy sale

DUNCAN HOOD

DEAL OF THE DAY: Viterra buys Quebec oilseed plant for $190-million

Viterra Inc., the agriculture segment of Glencore PLC, said on Thursday that it agreed to buy Eastern Canada’s largest oilseed processing plant from Malaysia’s Felda Global Ventures Holdings Bhd. Felda, the world’s third-largest palm plantation operator, said it would sell the TRT-ETGO plant at Bécanour, Que., to Viterra for $190-million. Full story

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CIBC’s Belsher to retire in executive shakeup

DAVID BERMAN

Canadian Imperial Bank of Commerce’s co-head of wholesale banking, Geoff Belsher, is retiring from the bank at the end of September as part of a broad executive reorganization at the lender under new chief executive officer Victor Dodig.

Harry Culham, who shared the wholesale banking role with Mr. Belsher, was named group head of the division.

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McRock Capital adds another major global investor to first fund

SEAN SILCOFF

Toronto-based venture capital fund McRock Capital has added a third big global investor to its first fund, which has closed after raising $65-million, the top end of its target.

McRock, which seeks to back early-stage companies focused on the “industrial internet of things” sector, closed out the McRock iNFund LP with a $10-million commitment from the HarbourVest Canada Growth Fund, managed by global private markets giant HarbourVest Partners LLC. The HarbourVest fund joins McRock backers Électricité de France and Cisco Investments as well as Canadian backers Alberta Enterprise Corp., BDC Capital, Export Development Canada, Kensington Venture Fund LP, and Teralys Capital Innovation LP.

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RBC loses fixed-income ground as BMO drives hard

NIALL McGEE

RBC Dominion Securities Inc.’s long-term lock on underwriting and trading fixed income in Canada is under siege.

“There is only one story in Canadian fixed income this year, and that story is BMO,” according to a Greenwich Associates report released Wednesday. BMO Nesbitt Burns Inc. has “closed the previously precipitous gap.”

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OSC investment funds head departs for an asset manager

CLARE O’HARA

Long-time regulatory executive Rhonda Goldberg has joined the asset management industry she has spent the past 16 years overseeing.

Ms. Goldberg, a former director with the Ontario Securities Commission, will assume the role of vice-president of regulatory affairs for investment powerhouse IGM Financial Inc., parent company of Mackenzie Financial Corp. and Investors Group Inc., on Sept. 15.

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The inside story of the mess at AGF

Tim Kiladze

In early December of last year, as the investment community was starting to gear down for the holidays, Blake Goldring quietly prepared to drop a bomb. As a dim morning light spread over Bay Street, the CEO of AGF Management Ltd. got ready to announce the most contentious move of his 15-year reign.

A fierce debate among investors and analysts had presaged the decision. Simple math suggested there was no other option but to cut AGF’s dividend: By December, quarterly payments to shareholders ate up virtually all of AGF’s free cash flow, leaving nothing to invest back in the business. Still, there was a major unknown: Would Goldring have the nerve to chop the payout? Few things irk investors more than dividend cuts, and the CEO was already under siege for AGF’s ugly investment performance.

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Daily Deal Roundup: Tricon Investment Partners files IPO

AHMAD HATHOUT

DEAL OF THE DAY: Schlumberger to buy Cameron International

Schlumberger Ltd, the world’s top oil field services company, is set to acquire oil field equipment maker Cameron International Corp in a deal valued at $14.8-billion (U.S.). Cameron’s shares shot up to $61.94 in premarket trading on Wednesday, while Schlumberger’s shares rose 1.4 per cent to $73.57. Full story

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The Man Who Shorted Canada on why his view hasn’t changed

SEAN SILCOFF

The Man Who Shorted Canada is as pessimistic as ever about the country’s prospects.

In fact, Vijai Mohan foresees a downturn for this country that could rival the early 1990s recession in its severity.

In April, 2013, his San Francisco-based hedge fund, Hyphen Partners LP, had made a big bet against the Canadian economy, amassing short positions against bank shares and the loonie, betting their value would fall sharply. At the time, he was an outlier, although others joined the “Sell Canada” bandwagon.

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Lexpert: Legal job market looking up for students, junior associates

Anyone with their finger on the pulse of the legal job market will be used to hearing words such as “cutting back” and “slimming down.” But some legal recruiters say the news is not nearly as grim as you might assume at the articling student and junior associate end of things.

“What I am seeing over the next 12 to 14 months is rapid growth in terms of the number of jobs,” says Gene Roberts, director of Robert Half’s legal recruitment division in Toronto. “I think we are going to see job growth of between 3 per cent and 5 per cent, largely driven by litigation and corporate-law practice areas – mergers and acquisitions, corporate securities and areas like that.”

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Montreal’s Real Ventures closes $89-milion fund

SEAN SILCOFF

One of Canada’s most successful early-stage venture capital firms, Montreal’s Real Ventures, has closed its third fund, an $89-million pool co-managed by Janet Bannister, who created and built the online classifieds business Kijiji for eBay.

The fund is noteworthy for several reasons aside from the leadership of Toronto-born Ms. Bannister, an all-too-rare female general partner in the male-dominated VC scene. Its backers include the Government of Canada, which has invested $10-million through its Venture Capital Action Plan program, as well as one of Canada’s largest and oldest private foundations, the $635-million McConnell Foundation of Montreal.

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Daily Deal Roundup: WSP Global buys MMM Group for $425-million

SERES LU

DEAL OF THE DAY: Encana to sell Louisiana natural gas assets for $850-million

Canadian oil and gas producer Encana Corp. said it will sell its Haynesville natural gas assets in northern Louisiana for $850-million (U.S.) to GEP Haynesville LLC. The company has been concentrating spending on regions rich in high-value gas liquids and oil and selling off natural gas assets. It plans to reduce its gathering and midstream investments by about $480-million on an undiscounted basis by 2020. Full story

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Top executive Ross McCredie parts ways with Dundee Corp.

NIALL McGEE AND GARY MASON

One of the most high-profile figures in the Canadian luxury real estate industry has departed Dundee Corp.

Ross McCredie, who was CEO of Sotheby’s International Realty Canada, which specializes in selling high-end homes and McMansions to affluent Canadians, parted ways with Dundee last month.

On July 15, in an internal statement sent out to Sotheby’s International Realty Canada and Quebec real estate agents, the firm announced that Mr. McCredie was leaving the firm. No reason was given for his departure. Robin Conners assumed the CEO role on an interim basis, according to the statement.

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Vanedge looks to raise Vancouver’s biggest VC fund

SEAN SILCOFF

Vancouver’s venture capital community has taken a lot of knocks in recent years: The number of VC firms investing in tech startups has shrunk to 9 from 43 in 2002, and some entrepreneurs around town mutter that many of those still in business are small, lacklustre and not as supportive of local companies as they should be.

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Daily Deal Roundup: Sun Life in talks for possible $900-million acquisition

DUNCAN HOOD

DEAL OF THE DAY: Sun Life in talks to buy Assurant’s employee benefits unit

Sun Life Financial Inc. is in talks to buy Assurant Inc.’s employee benefits unit, people with knowledge of the matter said. A deal valuing the unit at as much as $900-million (U.S.) could be announced within two weeks, said the people, who asked not to be identified because the matter is private. A sale hasn’t been finalized and the talks could still fall apart, they said. Full story

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Watsa wisdom: Fairfax’s (latest) bet on a market correction

JACQUELINE NELSON

Monday’s widespread market tumult prompted calls that lofty stocks were overdue for a correction in many parts of the world.

But few have been foretelling a downturn for as long as Prem Watsa, chief executive officer and founder of investment and insurance company Fairfax Financial Holdings Ltd.

A long-time value investor, Mr. Watsa has warned about risks in the global markets in recent years, as his company fully hedges its equity portfolio to protect against “permanent capital loss from the many potential unintended consequences that abound in the world economy.”

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Fairfax shareholders approve new voting powers for Watsa

JACQUELINE NELSON

Shareholders of Fairfax Financial Holdings Ltd. have approved a proposal to lock in the voting control of founder Prem Watsa’s shares.

The insurance and investment company said Monday that its move to modify the terms of the company’s dual-class share structure passed its shareholder vote by a narrow margin after twice being delayed to rally more support. The company needed two-thirds of subordinate shareholders to consent to the changes and received support of 69.7 per cent.

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