Canaccord Executives Attempt to Buy Out Company Following Share Price Decline

Canaccord Genuity Group Inc.'s management team is looking to take the company private in a C$1.13 billion ($843 million) deal, taking advantage of a drop in the share price after last year's turmoil in capital markets.

The management group, which includes the firm's CEO, chairman and other senior executives, owns a combined 21% of the shares, according to a statement Monday. The firm's largest outside shareholder also supports the bid of C$11.25 per share, the statement said.

Canaccord's stock has fallen sharply since November 2021, when markets began to plunge in the wake of the pandemic. The company is now looking to return to private markets after 18 years, as volatile markets and plunging global equity prices have put a chill on the initial public offerings and other transactions the firm specializes in.

"The common shares, which reflect the inherent volatility of the global capital markets in which the company operates, have not been well-suited for trading in a public marketplace," CEO Dan Daviau said in the statement. "As an employee-owned business, the company will be able to focus its efforts solely on advancing its proven strategies in ways that serve the best interests of its clients."

The offer price of C$13.50 per share represents a 31% premium to the closing price on Friday and a 42% premium to the volume-weighted average price from the previous 20 days. However, the offer price is not much higher than the C$10.25 price of the company’s initial public offering in 2004.

The buyout group plans to finance the bid with an C$825 million first-lien loan facility from HPS Partners, which owns a stake in Canaccord’s UK wealth business. The group plans to approach other employees or officers of the company to join the group, which already includes all members of the firm’s global operating committee.

If the deal is completed, all of the common shares will be owned entirely by its employees and officers. Canaccord's executive leadership, management, and operations aren't expected to change materially, according to the statement.

Daviau and Chairman David Kassie are the largest shareholders of Canaccord with a combined stake of over 8%, according to data compiled by Bloomberg. The two men were among the founders of independent investment bank Genuity Capital Markets. Genuity Capital Markets was acquired by Canaccord in 2010.