Steady growth brings $333-M payoff

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This article was published 27/05/2011 (5426 days ago), so information in it may no longer be current.

WHEN Charlie Spiring and four colleagues left the Winnipeg office of Midland Walwyn to start Wellington West Capital in 1993, few thought the firm would last and succeed to the extent it has.

On Thursday, National Bank Financial Group agreed to pay $333 million to buy the company.

“This is 10 times better than what I had ever thought possible,” said Spiring, 54.

Eighteen years after setting up shop with $200 million in assets under administration, the company now has more than $10 billion and a workforce of more than 600 people.

“All our clients and advisers can be so proud they we were able to do this transaction,” said Wellington West president Kish Kapoor. “We have built a brand that has a huge presence in Western Canada.”

Considered to be one of the worst-kept secrets in the business, National Bank has wanted to buy the Winnipeg-based operation for at least four years.

The Montreal-based bank, Canada’s sixth largest, bought a 12.5 per cent stake in 2008 and has been trying to buy more ever since.

Many analysts applauded the deal in that it dramatically increases the bank’s presence outside its strong base of operations in Quebec.

Spiring insisted there would be little impact on Wellington West’s staff, spread out among a retail adviser office network of about 50 locations and a head office in Winnipeg with about 125 employees.

Unlike other corporate acquisitions, this one is not likely to hollow out that head-office infrastructure.

Spiring will become vice-chairman of National Bank Financial, in charge of the bank’s wealth-management business outside of Quebec, and Dennis Stewner, Spiring’s right-hand man, becomes national sales manager outside of Quebec.

Both will remain in Winnipeg, ensuring the existence of the financial institution’s Waterfront Drive headquarters.

In addition, Greg Thompson, head of Wellington West’s Capital Markets office in Toronto, will become head of National Bank’s operation.

“This is a serious team we’ll have here in Winnipeg,” Spiring said “They want us to do business development, acquisition and recruiting out of here. Those are high-skilled, high-paying jobs to keep here.”

He started the firm in 1993 with $1.25 million in cash and four partners, two of whom are still with the firm.

“I don’t know if you could pull that off today,” he said.

In addition to being responsible for creating wealth and employment for its staff and customers, Wellington West has played a key role in wealth creation in the broader Manitoba economy.

Mike Pyle, CEO of Exchange Income Corp., put it bluntly. “We wouldn’t be here without Wellington West.”

When Exchange bought Perimeter Airways in 2004, it needed to raise $8 million and Pyle said firms in Toronto laughed at it.

“It was way too small to interest anyone down East. But Wellington West did it,” he said. “We grew, they stayed with us and helped us bring in other partners.”

Exchange Income now has a market cap of more than $300 million. Wellington West was instrumental in bringing many other Winnipeg companies to the market and its boutique corporate-finance office will continue to perform the same way.

Dan Richards, CEO of Clientinsights of Toronto, a veteran independent adviser, said the deal helps both National Bank and Wellington West.

“National Bank made no bones about the fact it wanted to expand outside Quebec and I guess they concluded that it was going to take them too long to do it organically,” he said. “For Wellington West’s advisers, they realized it was not impossible to be successful without the deep pockets and perceived reputational strength of being part of a big bank, but it’s a lot easier (to do it as part of a bank).”

 

National Bank gets of one of Canada’s few remaining independent brokerage firms which will immediately boost the presence of its wealth-management business in Western Canada — the country’s fastest-growing region.

“This transaction marks a natural evolution of a mutually successful partnership for many years,” bank CEO Louis Vachon said during a conference call Thursday.

The bank will pay $273 million for the 81.8 per cent of Wellington West it didn’t already own, including $74 million of excess cash. That values Wellington West at $333 million. Analysts seem to agree it is a fair price.

“Our two organizations share distinctive entrepreneurial cultures with complementary operations and the combination will make us a stronger national organization.”

Wellington West shareholders will be entitled to receive, at their option, either cash or common shares of National Bank, up to an aggregate maximum of 2.2 million common shares.

About 90 per cent of Wellington West’s staff were shareholders. The deal values those shares at about $55. The addition of Wellington West and its 223 advisers and $410 billion in assets will add 50 per cent to National Bank’s presence outside of Quebec.

National Bank Financial’s revenues should grow by 25 per cent, the number of its investment advisers by 29 per cent to 983 and assets under administration by 18 per cent to $67 billion.

“This is a perfect fit with National Bank’s wealth-management activities,” Luc Paiement, co-CEO of National Bank Financial, told analysts.

Wellington West has developed close relationships with clients in geographic areas where National Bank Financial wants to consolidate its market position, he added.

National Bank Financial co-CEO Ricardo Pascoe said the acquisition will allow the company to achieve its stated objective of attaining a leadership position in investment banking for mid-cap energy and mining companies in Canada.

“What we’re really going after is Wellington West’s client relationship and their research coverage.”

— With files from CP

martin.cash@freepress.mb.ca

A brief history of Wellington West

 

1993 — Charlie Spiring, a top investment adviser, leaves Midland Walwyn to open independent investment advisory boutique in Winnipeg.

1996 — Adds financial planning capability to complement full-service brokerage. Named one of 50 Best Managed Companies in Canada.

2000 — Reaches $500 million in assets under administration (AUA).

2002 — Hits $1 billion in AUA, and established solid presence in Western Canada.

2003 — Achieved $2 billion in AUA. Set goal to expand nationally with a target of $3 billion AUA by December 2004.

2004 — Achieved $3 billion AUA, 10 months ahead of goal with coast-to-coast presence established. Ranked No. 1 in Investment Executive Brokerage Report Card.

2005 — Hits $5 billion AUA and adds capital markets capability. Top marks for the second consecutive year in Investment Executive Brokerage Report Card.

2006 — Achieved $7 billion AUA and again, top marks in report card.

2007 — $9 billion in AUA and ranked No. 1 for fourth consecutive year in Investment Executive Brokerage Report Card. Named by Canadian Business Magazine’s Profit 100 as one of Canada’s fastest-growing companies with revenue growth of 823 per cent since 2001.

2008 — $10 billion in AUA.

2009 — Purchased Brownstone Investment Planning Inc.

2010 — Ranked as one of the Best Employers in Canada for sixth year in a row.