Here are the top reads on deals and financial services over the last week. Have a great weekend!
Canadian corporate debt growing and getting riskier: Canada’s corporate debt markets have picked up where they left off after grinding to an abrupt halt at the end of 2018: growing in size and adding more risk. Though record levels of household debt grab most of the attention, corporate debt has actually grown at a faster pace since the financial crisis. Story (James Bradshaw, for subscribers)
Shareholders demand more information on ‘rushed’ TransAlta investment: A group of U.S. activist investors has clarified its opposition to Brookfield Renewable Partners LP’s proposed investment in TransAlta Corp., arguing that the complex agreement sidelines potentially better transactions and undervalues the power generator’s hydroelectric assets. The renewed opposition follows Monday’s announcement by TransAlta that it had agreed to a $750-million investment from Brookfield Renewable Partners to help the Calgary-based company accelerate its transition from coal-fired plants to cleaner hydroelectric assets. Story (David Berman, for subscribers)
Hydro One names BC Hydro’s Mark Poweska as new president and CEO: Hydro One Inc. concluded its eight-month search for a new leader Thursday by announcing B.C. Hydro executive Mark Poweska as the utility’s new president and CEO. Mr. Poweska is currently executive vice-president, operations, for the government-owned company that runs British Columbia’s electrical transmission network. He replaces former CEO Mayo Schmidt, who stepped aside from Hydro One last July. Story (Andrew Willis, for subscribers)
AIG exits Canadian home and auto insurance market amid industry shakeout: AIG Insurance Co. of Canada is quietly exiting the domestic property and casualty insurance business, the latest player to quit the domestic market amid a consolidation trend that’s contributing to a rise in insurance rates. The Toronto-based division of American International Group Inc., one of the world’s 20 largest insurers, decided earlier this year to shut down a home and auto insurance business that catered to wealthy Canadian clients. Story (Andrew Willis, for subscribers)
First Nations-led group planning bid for majority stake in Trans Mountain pipeline: A First Nations-led group is putting together a bid to buy a 51-per-cent stake in Ottawa’s Trans Mountain oil pipeline with the aim of kickstarting the long-delayed expansion by giving Indigenous communities a financial stake. All First Nations in Saskatchewan, Alberta and British Columbia are being invited to participate in the $6.8-billion plan, which values the project at more than $13-billion. Story (Jeffrey Jones, for subscribers)
They came, they saw, they pillaged: Why activist hedge funds are the new corporate raiders: Activist investors were once a noble bunch, fighting for the rights of regular shareholders. These days, it’s hard to tell the altruists from the raiders. ROB Magazine (Tim Kiladze, for subscribers)
Blackstone Group to buy Vancouver office complex Bentall Centre from Anbang: Private equity company Blackstone Group and a Los Angeles real estate trust have a deal to buy Anbang Insurance Group’s office complex in Vancouver, the companies announced on Wednesday. Story (Rachelle Younglai, for subscribers)
Healthcare of Ontario Pension Plan CEO Jim Keohane to retire in March 2020: Healthcare of Ontario Pension Plan chief executive Jim Keohane announced Wednesday that he is retiring next year, leaving two of Canada’s largest pension funds looking for new leaders after OPTrust launched a search for a new head last week. Story (Andrew Willis, for subscribers)
A storm is brewing at Richardson GMP: Wealth manager Richardson GMP is a dormant volcano these days, with only the occasional puff of smoke in the form of a few employee departures signalling the pressure building within a firm that manages $27.4-billion. For the Toronto-based company’s 166 financial advisers and their clients, the question is whether Richardson GMP resolves its internal tensions in one explosive event or a prolonged quiet venting of talent. This business is either going to get sold or see an increasing number of its top performers head out the door. Story (Andrew Willis, for subscribers)
Don’t be so dismissive of The Big Short’s bet against the Canadian banks: U.S. hedge fund manager Steve Eisman became famous through his depiction in Michael Lewis’s financial crisis book, The Big Short, which detailed the manager’s successful shorting of markets before the crisis hit. Mr. Eisman is now infamous in Canadian investing circles after reports, initially in the Financial Times, said he has built short positions against Canadian bank stocks. Bank of Montreal is a potential target for one of the short positions (Mr. Eisman would not comment on specific stocks) so it might be surprising that BMO economist Robert Kavcic recognizes the validity of the trade, writing, “it actually isn’t that over the top, calling for slower economic growth and normalizing credit conditions. We’d actually agree on both counts.” Story (Scott Barlow, for subscribers)
Calgary’s Enmax to purchase Emera’s Maine assets for $1.3-billion: Enmax Corp., the city of Calgary’s municipal power utility, is buying Emera Inc.’s transmission and distribution operations in Maine for $1.3-billion, its first foray outside Canada. The debt-funded deal allows Enmax to increase the size of its regulated rate base by 50 per cent and that should put its finances on more solid footing by reducing the influence of volatile commodity markets, it said. Story (Jeffrey Jones, for subscribers)
Newmont, under pressure over Goldcorp deal, offers dividend to shareholders: Newmont Mining Corp. plans to pay its shareholders a one-time dividend worth US$470-million after a number of its biggest investors pushed for the giant miner to redo the terms of its US$10-billion takeover of Goldcorp Inc. The sweetener makes it more likely that Colorado-based Newmont will win support from its shareholders, who are set to vote on the transaction in a couple of weeks. If Newmont succeeds, it will bypass Barrick Gold Corp. and become the biggest gold company in the world by market value, production and reserves. Story (Niall McGee & Rachelle Younglai, for subscribers)
MORE DEALS AND FINANCIAL SERVICES NEWS FROM FRIDAY
Hiring outside CEO will help Wells Fargo, but full turnaround will take a long time, analysts say: Wells Fargo & Co.’s plan to bring in an outsider as its next chief executive could give the scandal-plagued bank a much-needed fresh start, but a turnaround will not be easy for whoever takes the helm, analysts said. Story
Deutsche-Commerzbank tie-up opposed by 43 per cent of Germans: poll: Some 43 per cent of Germans are against a merger between Deutsche Bank and Commerzbank, a survey showed on Friday, while only 17 per cent are in favour. Story
Lyft shares soar as investors bet on the future of ride-hailing services: Lyft’s shares soared as the company went public Friday, giving investors their first chance to bet on the future of the ride-hailing industry. Story
Morgan Stanley announces its president Colm Kelleher to retire at end of June: Morgan Stanley President Colm Kelleher, who has worked for the firm for roughly 30 years, will retire at the end of June, the bank said on Thursday. Story (for subscribers)
Mondelez in advanced talks to buy Campbell’s international business, report says: Oreo cookies maker Mondelez International Inc. is in advanced talks to buy international brands of U.S. food company Campbell Soup Co, Bloomberg reported late on Thursday. Story
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