Canaccord Profits Increase 87% in Record Quarter for M&A Expenses
(Bloomberg) – Canaccord Genuity Group Inc. traders had their best quarter in history after an influx of cheap capital to companies fueled an acquisition boom and boosted profits.
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Net income rose 87% from a year earlier to C $ 61.8 million ($ 49.7 million) in the three months to September 30, the company said on Monday. Earnings were 58 cents per share, excluding significant items, on a diluted basis.
CEO Dan Daviau said companies are bursting with capital, helped by low interest rates and rising stock markets, making it easier for them to spend money on strategic priorities at long term. Consulting revenues for the second quarter of the year reached a record C $ 139.4 million, including C $ 103.6 million from the United States, where Canaccord’s 2019 acquisition of Petsky Prunier Fusion Shop generates earnings.
“The M&A market is remarkably strong,” Daviau said in an interview. “What tends to drive M&A is access to money – and there’s tons of debt there, and there’s tons of equity there, so you have a fairly dynamic M&A market. “
The pipeline of acquisition activity is strong for the next two quarters for sure and possibly even for another full year, Daviau said.
Canaccord climbed 8% to C $ 16.43 at 9:39 a.m. in Toronto, the biggest intraday gain since November 2020. Shares of the company, which is legally based in Vancouver but largely run from Toronto, rose 42% this year. , beating the 24% gain of the S & P / TSX Composite Index.
Total revenues from Canaccord’s global capital markets operations increased 26% to C $ 304.9 million, with advising fee gains more than offsetting lower trading activities for clients and issuers.
Elsewhere, revenues from the global wealth management business increased 14% to C $ 166.2 million, driven by gains in the three main segments of North America, UK and Canada. Australia.
The period of higher profits throughout the pandemic and the C $ 218 million sale of a 22% stake in its UK wealth management business earlier this year left Canaccord 1.73 billion Canadian dollars in cash on its balance sheet at the end of the quarter, up 91% from the previous year.
Canaccord could use its additional capital to repurchase shares, strengthen its wealth management business in Canada and the UK, potentially through acquisitions, and strengthen its merger and acquisition business, Daviau said.
“In terms of the balance sheet, we are really, really strong,” said Daviau. “You will continue to see us use our balance sheet intelligently over the next few months. “
(Updates with share transfer in sixth paragraph.)
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