Canaccord Genuity Group Inc. shareholders can look forward to special dividends if the company keeps posting big deals such as the agreement by client Amaya Gaming to purchase the owner of PokerStars for $4.9-billion (U.S.) Canaccord is acting as one of two advisers on the acquisition, as well as advising on components of the financing. The fees are likely to be in the $30-million range.
The investment banking firm has had a number of wins of late, leading initial public offerings for Callidus Capital, Lumenpulse Inc. and Kinaxis Inc. in recent months. All those deals have come since the end of Canaccord's last quarter, when it had an estimated $100-million of capital over and above regulators' requirements.
So as money rolls in from this point, look for about 50 cents on the dollar of profit to be paid out to shareholders. Analyst Sumit Malhotra of Scotia Capital predicted earlier this month that Canaccord is in a position to begin "regular specials," and the company seems to be leaning that way.
While Canaccord likes having the excess capital, chief executive officer Paul Reynolds said on the last quarterly conference call that the dividend policy is to pay out 50 per cent of earnings and that will take place "through regular dividends and special dividends." (The company had been doing share buybacks when the stock was lower, but now that it's above book value, buybacks are less attractive.) Look for Canaccord to evaluate its capital every six months and decide whether there is room for a special, Mr. Reynolds said. The fee from Amaya should help ensure there is.
Canaccord Genuity and Deutsche Bank Securities were lead advisers to Amaya on the takeover, with Macquarie Capital and Barclays as co-advisors. The seller, Oldford Group, used Houlihan Lokey.
Canaccord is also leading a bought deal of $130-million of convertible preferred shares of Amaya, and is a co-lead with Cormark Securities and Desjardins Capital markets on a sale of as much as $640-million of subscription receipts.
Amaya used Osler, Hoskin & Harcourt as its Canadian lawyers.
Amaya lined up a $2.1-billion credit facility from Deutsche Bank, Barclays and Macquarie. Those three banks also underwrote an $800-million term loan.