The board of Canaccord Genuity Group Inc. may prefer a deal involving its U.K. wealth management unit to a sale of the entire company, analysts say.

Canaccord, which is Canada’s largest non-bank brokerage, is exploring strategic options including a sale of all or part of its business, according to people familiar with the matter, Bloomberg reported Friday. The move comes after activist investor Eric Rosenfeld and former Canadian Imperial Bank of Commerce executive Gillian Denham joined its board of directors.

“A potential sale of Canaccord outright is low, as there may be a limited pool of potential buyers interested in Canaccord’s globally distributed and diverse assets,” Graham Ryding, an analyst at TD Securities in Toronto, said in a note to clients.

The board might be “hesitant to sell outright the U.K. wealth business, its most valuable asset, in our view,” Ryding said. But Canaccord could try to boost the scale of its U.K. wealth unit by combining it with another similar-sized firm, he added.

“U.K. wealth provides material earnings stability, and management still sees good growth and margin upside,” he wrote. The division had US$34 billion in client assets as of June 30.

Underwriting Slump

Canaccord shares have soared this year despite the COVID-19 pandemic, rising 63 per cent. That rally comes after a slump that saw the stock decline 38 per cent in the five years ended Dec. 31, 2019.

Smaller investment banks in Canada have been hit by hard times in the energy sector, which has crushed underwriting activity for junior oil and gas companies, and by the correction in the cannabis industry, a major source of business for Canaccord in previous years. The company’s capital markets unit bounced back in the fiscal first quarter ended June 30, partly on the strength of investment banking activity in mining.

TD’s Ryding estimated the company’s U.K. wealth business is worth C$6 to C$8 a share, or as much as C$871 million (US$652 million) at the high end. Canaccord shares were trading at C$7.86 as of 11:13 a.m. Monday. They rose 9.7 per cent on Friday.

Canaccord’s sum-of-the-parts value on the low end is pegged at C$13.48 per share by Cormark Securities. The high end is C$18.26 a share, according to analyst Jeff Fenwick.