Canada-based Canaccord Genuity has struck a deal to acquire underperforming Perth-based stock broker Patersons Securities for about $25 million.
Canada-based Canaccord Genuity has struck a deal to acquire underperforming Perth-based stock broker Patersons Securities for about $25 million.
Patersons’ directors and senior management, which represent 60 per cent of its shareholders, have confirmed they will be voting in favour of the proposed transaction.
In a joint statement, the two companies said the wealth management business of Patersons has more than 100 investment advisers with $13.6 billion in client assets under advice.
It has more advisers than any other broking firm in Perth though competitors Hartleys and Euroz have consistently generated more revenue and higher profits.
The takeover builds on Canaccord's solid profile as a lead manager for equity capaital markets deals. It has advised on 72 capital raisings worth $1.39 billion for WA clients over the past decade, according to the BNiQ database.
Canaccord Genuity's Australian wealth management business will be known as CG Patersons, and Patersons executive chairman Michael Manford will hold the same position at CG Patersons.
Canaccord Genuity chief executive Dan Daviau said the transaction builds upon the work that its Australian partners have done to make Canaccord Genuity an increasingly strong competitor.
“The addition of Patersons supports our strategy of substantially increasing the scale of our wealth management operations and improving our business mix to deliver greater stability and long-term value for our clients and our shareholders,” Mr Daviau said.
Mr Manford said the rationale for joining Canaccord Genuity was compelling and provided additional breadth and depth of services for its clients.
“Most importantly, the Patersons and Canaccord Genuity Australia teams place a high value on employee partnership and lasting client relationships,” he said.
Patersons has four offices in WA and six interstate.
Canaccord Genuity has been advised by EM Advisory and Allens, and Patersons has been advised by Clayton Utz.
For the 2018 financial year, Patersons earned net profit of $3.2 million from revenue of $61.8 million.
The companies said “after a difficult first half”, Patersons is expected to breakeven for the 2019 financial year with net revenue of approximately $52 million.
For the 2017 financial year it recorded a net profit of $2.9 million, its first profit since 2010.
Patersons was originally an accounting business founded by James Paterson in 1903.
The firm commenced stockbroking in 1922 and expanded nationally during the 1990s.
A meeting of Patersons shareholders to vote on the transaction is expected to be held in October 2019.
