Business

Toronto's GMP sells off capital markets business to U.S.-based Stifel

GMP Capital Inc. has signed a deal to sell the bulk of its capital markets business to Stifel Financial Corp. in a deal worth roughly $70 million.

Financial services firm to expand stake in Richardson GMP as it concentrates on wealth management

In a significant restructuring, Toronto's GMP Capital is selling its capital markets business and plans to invest more in wealth management. (Adrien Veczan/Canadian Press)

GMP Capital Inc. has signed a deal to sell the bulk of its capital markets business to Stifel Financial Corp. in a deal worth roughly $70 million.

Under the deal, Stifel, which is based in St. Louis, Missouri, will pay the tangible book value of the business, less cash, plus $45 million.

The Toronto-based financial services firm says it plans to make its wealth management business the core of its growth strategy going forward.

"With this sale, the GMP Board intends to deploy the corporation's strong capital position to focus and invest heavily in wealth management where we see significant opportunities to partner with the Richardson family, our top performing investment advisers and management at Richardson GMP to create significant long term value for shareholders," said Don Wright, GMP's chairman of the board and special committee in a statement.

Buying bigger stake in Richardson GMP

The firm, which holds a 33 per cent stake in Richardson GMP Ltd., says it is in talks with Richardson Financial Group Ltd. to acquire the stake it does not already hold.

Stifel's chief executive and chairman Ronald J. Kruszewski said this acquisition is the "latest step in the build out of our premier middle market investment banking offering."

"The addition of GMP's capital markets business further enhances our institutional business given its strength in the Canadian markets and within the technology, health care, cannabis and energy verticals," he said in a statement.

CEO Harris Fricker to join Stifel

GMP chief executive Harris Fricker and other key personnel have agreed to join Stifel once the deal closes.

The company said assuming the successful completion of the transaction it plans a one-time return of capital distribution of 27.5 cents per share.

The sale and the return of capital payment require approval by a two-thirds majority vote by shareholders.

GMP Capital shares rose 12 per cent in Monday trading to $2.25 Cdn.