Canaccord gets cash infusion from Manulife

Vancouver-based Canaccord, whose subsidiary, Canaccord Capital, serves as a brokerage house for a number junior mining companies in Canada, has reached a deal to sell 20% of its outstanding shares to Toronto-based insurance giant Manulife Financial.

Cash from the sale would fund acquisitions and allow Canaccord to expand its brokerage business in effort to keep pace with bank-owned brokerage houses.

Under the agreement, Manulife would acquire treasury shares equivalent to roughly 13% of the issued and outstanding shares of Canaccord, as well as a convertible note representing the remaining ownership stake (7%). The debenture is convertible into shares at any time in the next five years.

Regulators have yet to approve the deal, and the price of the transaction was not disclosed.

Management at the employee-owned investment house insists the deal will not affect the company’s autonomy.

“Our new relationship with Manulife will help fuel our growth,” says Peter Brown, chief executive officer of Canaccord. “However, we will continue to maintain our independence.”

Canaccord President Michael Greenwood adds, “Proceeds will be used to fund additional acquisitions, expand our clearing brokerage business, and materially expand our products and service offerings for our wealth management clients.”

For its part, Manulife sees the deal as an investment and not a sortie into the brokerage business.

“Manulife’s relationship with Canaccord is first and foremost a portfolio investment,” says Warren Thomson, senior vice-president of investments at Manulife.