Canaccord putting $60M into recruiting advisors

Canaccord Genuity Group Inc. is investing $60 million, to be raised through a private placement deal, in its Canadian wealth management business.

The company, which also has wealth management offices in Europe, Australia, and the U.S., will use net proceeds from the credit agreement to grow its Canadian wealth management “through the recruitment of investment advisors and for general corporate purposes,” a release said on Wednesday.

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“The proceeds from this placement will directly support our growth plans for our Canadian wealth management business and creates an opportunity to recruit investment advisors, increase assets under management and improve the profitability of that business,” Dan Daviau, CEO of Canaccord, said in a statement.

Stuart Raftus, Canadian president of Canaccord Genuity Wealth Management, told Advisor.ca in an interview this month that acquiring “highly talented” advisors was part of its growth strategy.

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The placement agreement, which must be approved by regulators, was with an unnamed “Canadian asset manager,” Canaccord said. IIROC temporarily halted trading of Canaccord’s shares just before the announcement.

Canaccord’s Canadian AUA was $9.8 billion at the quarter ending June 30, down 7.8% from $10.6 billion a year earlier, which the company says reflected lower market values and a reduction in advisory teams.

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Speculation has mounted about further consolidation in the industry. An April 2016 analysis from Scotia Capital looked at which institution would be well-placed to purchase Richardson GMP, should it go up for sale. The analysts pegged Raymond James Canada, National Bank and Industrial Alliance as the likeliest buyers.

Raftus had told Advisor.ca that while Canaccord has “been on the acquisition trail” in the U.K., its Canadian operation would only “consider a very specific acquisition,” noting his firm is not trying to expand by adding thousands of advisors.

The industry has seen two high-profile acquisitions this year. In May 2016, Raymond James acquired 3Macs, and in January 2016, former Macquarie, RGMP, Dundee advisors found their fourth home at Echelon Wealth Partners, formerly Euro Pacific Canada.

Also read:

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