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Streetwise

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

New rules could add Shopify, Brookfield to Canadian index

ANDREW WILLIS

New rules are in the works for Canada’s benchmark stock index that could benefit dozens of companies listed on domestic and U.S. exchanges and open the door to index membership for Shopify Inc. and Brookfield Infrastructure Partners LP.

Right now, a company only gets invited into the flagship S&P/TSX composite index if the volume of trading in its stock exceeds predetermined thresholds on Canadian exchanges. The team that runs that benchmark, S&P Dow Jones Indices LLC, recently published a proposal that would make it easier for dual-listed companies to meet the threshold by counting buying and selling on U.S. exchanges, in addition to trading on domestic markets.

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A new source for corporate cash: At-The-Market offerings

ANDREW WILLIS

Corporate Canada is embracing a new, low-cost approach to selling stock, borrowing from the playbook of U.S. companies that have raised more than $50-billion in the past five years.

The concept is known as an At-The-Market offering, or ATM program, and it sees a public company announce plans to issue stock, then actually tap investors any time it sees fit, during a period of up to 24 months, by selling shares at prevailing market prices. While rare in the domestic market, more than 500 U.S. companies have put ATM programs in place, and Canadian regulators and stock exchanges are starting to push the approach.

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Streetwise newsletter: A second stab at Hydro One; China eyes Bombardier

Editor’s note: The Streetwise newsletter will return Wednesday, May 24.



Bay Street takes new run at Hydro One offering

Investment banks that underwrote Hydro One Ltd.’s $2.8-billion equity sale are taking a second stab at selling a large chunk of the shares after investors balked at the initial deal. Story (Tim Kiladze, Andrew Willis and Jeff Lewis)

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Bay Street takes new run at Hydro One offering

TIM KILADZE, ANDREW WILLIS and JEFF LEWIS

Investment banks that underwrote Hydro One Ltd.’s $2.8-billion equity sale are taking a second stab at selling a large chunk of the shares after investors balked at the initial deal.

Last week, Ontario Premier Kathleen Wynne’s Liberal government announced the bought-deal offering, selling 120 million shares at $23.25 apiece and reducing its stake in the Crown utility to 49.9 per cent.

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Lexpert: Appraisal rights, a live issue in the U.S., could come to Canada

LEXPERT

The Ontario Securities Commission has yet to publicly respond to a shareholder request to halt Cenovus Energy Inc.’s blockbuster offer for ConocoPhillips Canada’s assets and force it to be put to a shareholder vote following a major shareholder’s objection to the deal. And the OSC may simply allow the deal to close without intervening.

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Streetwise newsletter: Can markets remain resilient?; Oil mergers pick up

Deflating the 'hope rally'

The turmoil engulfing the White House rattled the world’s financial markets on Wednesday, leaving investors to question whether markets can remain resilient to U.S. political turbulence. Story (Tim Shufelt)



Oil-field services M&A activity picks up as drillers seek lower costs

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Streetwise newsletter: The great debate over the loonie; ownership limits raised on CN, airlines

Whither the loonie? Depends who you ask

Which way will the loonie head next? The market says down. Many of Bay Street’s leading economists say up. The stark difference in opinion between investors and experts underlines a key truth about currency markets: Nobody knows anything for sure. Story (Ian McGugan)

Ottawa loosens ownership limits on Bill Gates-held CN Rail and major airlines

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Lexpert roundup: Will the Cenovus deal be halted?; Chevron ruling has impact abroad

Lexpert identifies and reports on emerging business issues and practice areas in the business of law. Whether online, in our magazine or in the DealsWire e-newsletter, we chronicle deals and lawsuits of interest, and cover issues of broad concern to the legal profession and those who purchase legal services. We hope you enjoy this sampling of our latest content.

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Streetwise newsletter: PointNorth’s proxy war; CPPIB expands stake in India

PointNorth launches Liquor proxy war

Activist fund PointNorth Capital Inc. launched a proxy battle Monday at Liquor Stores N.A. Ltd. aimed at returning the 252-outlet chain to its roots in Western Canada. Story (Andrew Willis)



CPPIB buys into Indian logistics amid rising investor interest

Canada Pension Plan Investment Board is forging ahead with its plans to make significant new investments in India, taking a large stake in an industrial real estate partnership. Story (Jacqueline Nelson)

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PointNorth launches proxy fight at Liquor Stores N.A.

ANDREW WILLIS

Activist fund PointNorth Capital Inc. launched a proxy battle Monday at Liquor Stores N.A. Ltd. aimed at returning the 252-outlet chain to its roots in Western Canada.

PointNorth, a deep-pocketed private-equity firm founded by entrepreneur John Bitove, is waging a public campaign to put six directors on an eight-person Liquor Stores board at an annual meeting scheduled for June 20, after months of behind-closed-doors negotiations failed to reach an agreement.

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CPPIB buys into Indian logistics amid rising investor interest

JACQUELINE NELSON

Canada Pension Plan Investment Board is forging ahead with its plans to make significant new investments in India, taking a large stake in an industrial real estate partnership.

The country’s largest pension fund said Monday that it would spend $500-million (U.S.) to buy and develop modern logistics real estate, such as warehouses and industrial parks, through a joint venture with a local partner called IndoSpace.

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LNG backer plans merger with Quebec energy firm

JEFFREY JONES

A company proposing a liquefied natural gas project in Atlantic Canada has launched a reverse takeover of a Quebec exploration firm in a bid to bolster its ability to fund the multibillion-dollar development.

Privately held Pieridae Energy Ltd., backer of the Goldboro project in Nova Scotia, said it agreed to an amalgamation with TSX Venture Exchange-listed Pétrolia Inc., under which the resulting company would be a publicly traded, integrated LNG producer.

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Streetwise newsletter: last week’s best reads

Home Capital: Inside the lender’s meltdown

In the early hours of Monday, May 1, exhausted representatives for Home Capital and a group of lenders hung up the phone in frustration. A deal to give the company an emergency $2-billion loan appeared to be falling apart. Directors at the mortgage firm felt that without the money, they wouldn’t be able to open for business a few hours later.

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With PrivateBancorp takeover, CIBC must work to make deal pay off

ANDREW WILLIS

There’s an old line about the dog that catches the car. That’s Canadian Imperial Bank of Commerce.

The Toronto-based bank just sunk its teeth into PrivateBancorp Inc., scoring a landmark victory Friday when shareholders in the U.S. bank voted in favour of CIBC’s $4.9-billion takeover, an offer that was twice sweetened and very much in doubt until the final ballot was counted.

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Streetwise newsletter: Home Capital profit falls; Hydro One stock sale hits a wall

Home Capital profit falls

Home Capital Group Inc. reported a decline in first-quarter profit on Thursday and said the damage to its reputation that the business has sustained in recent weeks had resulted in “material uncertainty” about its ability to secure funding in the future.

The alternative mortgage lender’s profit fell to $58-million, or 90 cents a share, in the first three months of the year. That was down from $64.2-million, or 92 cents a share one year earlier. The company had delayed releasing its earnings by more than a week and said results were prepared on a “going-concern basis,” but added that issues such as regulatory proceedings, credit-rating downgrades and vacancies in the roles of CEO and CFO had “understandably shaken the confidence of the company’s stakeholders.” Story (Niall McGee and Jacqueline Nelson)



Hydro One stock sale hits a wall

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Hydro One stock sale hits a wall

TIM KILADZE and JEFF LEWIS

Ontario’s move to unload a $2.8-billion stake in Hydro One Ltd. has hit a standstill after investors balked at the stock sale, leaving underwriters with as much as half of the shares unsold.

The province’s cash-strapped Liberal government announced the huge offering Monday, selling 120 million shares at $23.25 apiece to a syndicate of investment banks on a bought-deal basis. That means the shares were purchased up front by the underwriters in hopes of reselling them quickly to public investors.

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Real Matters stock flat in long-awaited IPO

SHANE DINGMAN

Real Matters Inc. joined an exclusive club of publicly listed Canadian tech companies, becoming only the third such company since 2014 to raise more than $100-million in its initial public offering.

Unlike those other recent tech IPOs, Real Matters – which provides software tools to banks and lenders for real estate appraisals critical to the home-mortgage market – did not see the same kind of opening-day share price bump of either Kinaxis Inc. (up 14 per cent in its 2014 debut) or Shopify Inc. (up 51 per cent in its 2015 opener).

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Streetwise newsletter: Home Capital makes a deal with MCAP; Kinder Morgan has a plan to fund Trans Mountain

Deal with MCAP allows Home Capital to issue new mortgages

After three weeks of playing defence, lender Home Capital Group Inc. is attempting to move forward by cutting a deal with rival MCAP Corp. that allows Home Capital to make new mortgages and roll over existing ones.

Home Capital, Canada’s largest alternative-mortgage provider, said Tuesday that an “independent third party” intends to buy up to $1.5-billion of its commitments to new mortgages, along with home loans that are up for renewal and existing mortgages in its $18-billion portfolio. On Wednesday, sources familiar with the situation identified the mortgage buyer as MCAP, a sizable Toronto-based firm that does mortgage finance. Story (Andrew Willis, Niall McGee, Jacqueline Nelson and Christina Pellegrini)

This is the daily Streetwise newsletter. If you’re reading this on the Web or someone forwarded this e-mail newsletter to you, you can sign up for the Streetwise newsletter and all Globe newsletters here

Kinder Morgan seeks $1.75-billion IPO to fund Trans Mountain

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Lexpert: Contract automation programs could redefine corporate law

LEXPERT

In the drive for greater efficiency, law firms and in-house counsel are exploring and using contract automation programs that stand to redefine the practice of corporate law.

While basic forms of contract automation have been present in Canadian corporate law since the 1980s, at least, the past couple of years have seen much more sophisticated systems emerge.

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Kinder Morgan seeks $1.75-billion IPO to fund Trans Mountain

JEFF LEWIS

Kinder Morgan Inc.’s Canadian unit is seeking to raise $1.75-billion in an initial public offering to help fund its contentious Trans Mountain pipeline expansion as the project inches closer to construction.

Houston-based Kinder Morgan plans to offer the restricted voting shares at between $19 and $22 apiece while retaining an ownership stake of up to 77 per cent, according to an updated prospectus filed Wednesday.

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PSP charts ambitious investment course with European hub

JACQUELINE NELSON

The Public Sector Pension Investment Board is ramping up plans for international expansion, opening a London office and charting a more ambitious investment course.

The pension fund said Wednesday that it would launch a European hub to boost the fund’s investment exposure to the region, primarily through asset classes such as private equity and debt, infrastructure and real estate. It’s the latest effort by PSP to expand to key financial markets beyond Canada, and catch up to other Canadian pension giants that have steadily built beachheads around the globe.

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Streetwise newsletter: Home Capital shareholders have a good day; RBC sets expansion targets

Berman: Why Home Capital shares surged Tuesday despite a key question unanswered

After Home Capital Group Inc. reported that a buyer is looking at its mortgage book, investors jumped at the beaten-up stock without knowing a crucial bit of information: What is this mystery buyer willing to pay?

Investors, knowing that the value of Home Capital rests to a large extent on confidence in its loan book, aren’t sweating over the details.

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OMERS taps Bay Street giants for investing in venture-capital fund

SEAN SILCOFF

Pension giant OMERS has closed its third technology-oriented venture fund, a $300-million capital pool that includes backing from five other Bay Street giants – and no government money.

OMERS Ventures Fund III is also backed by Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank of Canada, Toronto-Dominion Bank, Sun Life Financial and U.S. fund-of-funds investment firm Wafra Group. OMERS didn’t disclose the breakdown but sources said OMERS contributed roughly two-thirds of the capital and the other six institutions accounted for the balance.

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Streetwise newsletter: Home Capital targets rebirth; Ontario selling more Hydro One shares; PrivateBancorp forges ahead with CIBC vote

Home Capital targets rebirth, not burial

Mortgage lender Home Capital Group got something money can’t buy on Monday: A much-needed dose of respectability.

Three weeks into a crisis of confidence that some expected to kill the company – and potentially undermine parts of the housing market – a trio of proven executives committed their formidable reputations to Home Capital by joining the board.

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Ontario selling $2.79-billion in new Hydro One shares

NIALL McGEE

Ontario is selling a further $2.79-billion stake in Hydro One Ltd., taking advantage of the recent short-term strength in the share price to shave down its holding.

The province said it sold 120 million shares at $23.25 apiece on a bought deal basis to a syndicate of Bay Street investment banks. The deal was done at a 3.25-per-cent discount to the closing price of $24.03.

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PrivateBancorp pushing ahead with CIBC takeover vote despite opposition

CHRISTINA PELLEGRINI

PrivateBancorp Inc. is forging ahead with a planned May 12 meeting for investors to vote on the $4.9-billion (U.S.) takeover offer by Canadian Imperial Bank of Commerce, even as one proxy advisory firm is urging that they reject the latest terms of the deal.

Last Thursday, CIBC said it was boosting its bid for the Chicago-based commercial bank for the second time in five weeks. To compensate for its falling stock price, CIBC hiked the cash portion of its cash-and-stock transaction by $3 per PrivateBancorp share, with this latest offer giving the U.S. lender an implied value of $60.43 a share.

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Goldman Sachs CEO to Trudeau: Relax, Trump likes you

ANDREW WILLIS

Lloyd Blankfein, chief executive officer of Goldman Sachs Group Inc., has some simple advice for Prime Minister Justin Trudeau as he works to forge a relationship with maverick U.S. President Donald Trump: relax, and ignore Twitter.

Mr. Blankfein was in Toronto last week sending an equally straightforward message to Canadian business leaders considering U.S. expansion: jump in, it doesn’t get much better than this.

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Credit Suisse lands ex-Morgan Stanley managing director

ANDREW WILLIS

Credit Suisse Securities (Canada) Inc. landed veteran investment banker Ram Amarnath from Morgan Stanley Canada Ltd. this week to anchor the global investment bank’s coverage of industrial companies and financial players such as pension funds.

Mr. Amarnath was a managing director at Morgan Stanley, and worked at the firm for 12 years, but started his career at a predecessor to Credit Suisse in 2001.

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Last week’s best reads: Home Capital, Real Matters, Callidus

Home Capital launches board shakeup in ‘governance renewal’

Mortgage lender Home Capital Group Inc. is taking the first step to shake up its board of directors, adding a new leader with experience in restructuring financial firms as it seeks to stabilize its business.

Home Capital said Friday that Alan Hibben would become a board member, replacing the company’s retiring founder Gerald Soloway. This change paves the way for the addition of more new board members, aiming to boost Home Capital’s credibility in the market at a time when it has had a run on deposits. The appointment will also help form a team that can nimbly make decisions about Home Capital’s future, either as an independent business or in a sale process. Story

Home Capital faces looming $325-million debt deadline

Home Capital Group Inc. is facing a major cash demand in coming weeks as $325-million of institutional deposit notes mature, adding more urgency to the mortgage lender’s need to secure long-term financing.

The company’s Home Trust subsidiary has three outstanding issues of deposit notes with a total value of $800-million, which have been trading furiously over the past week at a significant discount to their face value.

One of the notes matures in less than three weeks, on May 24, requiring Home Trust to repay holders a total of $325-million. The other two issues of notes, with a total value of $475-million, mature in March and December, 2018, and are a less pressing cash problem. Story


This is the daily Streetwise newsletter. If you’re reading this on the Web or someone forwarded this e-mail newsletter to you, you can sign up for the Streetwise newsletter and all Globe newsletters here

Canadian investors flock to Real Matters IPO

Real Matters Inc. continues to be a made-in-Canada success story with a made-in-Canada fan base. After a successful road show, will it get peace, order and a good investor reception when it goes public?

The online mortgage-services firm, which is set to begin trading on the Toronto Stock Exchange next Friday at a $1.17-billion valuation after pricing its shares this week at $13 each, has closed its order book after being seven times oversubscribed. Interestingly, demand for the roughly $157-million offering – $125-million from the treasury and the balance from existing investors – was overwhelmingly Canadian, with institutional investors across the country accounting for about 85 per cent of demand, and the rest split between U.S. and European investors, sources familiar with the deal said.

The deal, co-led by BMO Nesbitt Burns, INFOR Financial Group and Merrill Lynch, was already well oversubscribed at home before the road show hit Boston and New York this week. Story

Silicon Valley Bank sets sights on Canada

A leading U.S. bank catering to technology companies and venture capitalists is putting down roots in Canada, hoping to be a lender of choice for the next wave of Canadian innovators.

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Alignvest launches $250-million IPO for new SPAC

ANDREW WILLIS

The SPAC is back.

Alignvest Management Corp., the Toronto-based operator of a special-purpose acquisition company, or SPAC, that successfully took over a private U.S. telecom company in 2016, launched a $250-million initial public offering recently for the next generation of SPAC.

The new company is called Alignvest Acquisition II Corp. and like a new-and-improved version of a cellphone that comes with the hottest new gizmos, this SPAC features a financial innovation meant to give the SPAC more firepower for staging a takeover.

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