Canaccord Genuity Group Inc.’s management team is looking to take the firm private and the opportunistic move could actually be bullish for their business down the road, according to Bay Street veteran Frances Horodelski.
In a press release on Monday, the company said its chief executive officer, chairman and several senior executives are seeking to take Canaccord private in a $1.13 billion deal.
“A few years ago when markets were down and dirty, there was M&A (mergers and acquisitions) activity and the word opportunistic came up, and somehow it was a bad word,” Horodelski said in an interview on Monday.
“It's a great word, opportunistic. The stock's down and dirty, I think it's actually bullish, potentially, for their business down the road.”
The management team that’s looking to take the financial services business private owns a combined 21 per cent of shares, and the proposal is already supported by the largest independent shareholder, according to a press release on Monday
The company' stock has fallen 48 per cent since a pandemic peak in November 2021.
As of late Monday morning, the stock has climbed over 28 per cent on the news of the privatization plan, marking the largest intraday rise since 2008.
OPPORTUNITY ACROSS THE POND
Horodelski said she sees opportunity in Canaccord’s U.K. business.
“I think the U.K. operation might be an interesting one, but I think it's bullish (the privatization deal) for eventual opportunities in investment banking, in areas that they have previously excelled in,” she said.
Earlier this year, Canaccord announced it would be expanding its U.K. and European presence with the acquisition of London-based advisory business Results International Group LLP. Results specializes in M&A and corporate finance services in the health-care and technology sectors.
TAKING ADVANTAGE OF THE STOCK PRICE
Horodelski said the Vancouver-based company has faced a difficult and uncertain economic environment over the past few years, but that won’t last forever.
“If you can take advantage of things, whether it's at a low price or at a high price, to get the revenue to get the growth, you'll be better situated when things aren't as uncertain as they seem to be right now economically,” she said.
Canaccord has been a public company listed on the Toronto Stock Exchange for the past 19 years.
If the deal goes through, the financial services company would return to private markets for the first time since 2004.
However, Horodelski said even if Canaccord successfully goes private, she thinks the company “will be public again, at some time in the future.”
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