- EQB will enter asset management by acquiring an established
leader in pooled commercial mortgage funds with an exceptional
reputation for customer service
- Brings immediate scale with nearly $5
billion in assets under management
- EQB gains specialized capabilities to serve a new set of
Canadian customers
- Increases and diversifies fee-based revenue growth for EQB,
in addition to non-interest revenue from wholly owned subsidiary
Equitable Bank
- Expected to be accretive to earnings per share (EPS) in the
first year
TORONTO, Oct. 3, 2023
/CNW/ - EQB Inc. (EQB) (TSX: EQB) and (TSX: EQB.PR.C) and ACM
Advisors Ltd. (ACM) jointly announced today that they have entered
into a definitive agreements by which EQB will acquire a 75%
interest in ACM in a cash and share transaction.
With $4.8 billion in assets under
management as of September 30, 2023,
ACM is one of the most respected independent alternative asset
managers in Canada. Established in
1993 and based in Vancouver, British
Columbia, ACM specializes in the creation, structuring, and
management of pooled Canadian commercial mortgage funds on behalf
of pension plans, investment funds, charitable foundations,
corporations, and accredited retail investors. ACM will operate as
an independent subsidiary of EQB (separate and distinct from EQB's
wholly owned subsidiary Equitable Bank, Canada's Challenger
BankTM).
EQB anticipates the acquisition will close before the end of
2023, subject to the receipt of regulatory approvals.
Strategic expansion into wealth
management with a proven, well-established platform
Andrew Moor, President and CEO of
EQB said: "Organically and through accretive acquisitions, we've
positioned EQB to grow, innovate, and diversify as a leading
Canadian financial services company. The addition of ACM Advisors,
one of the most well-respected alternative fund managers in
Canada with a focus on commercial
assets, brings EQB an exciting platform for expansion with new
capabilities. ACM's pooled funds expertly invest in curated
commercial real estate mortgages to deliver best-in-class long-term
returns for its clients. This is an asset class EQB knows well
since we have provided financing to commercial clients for more
than 50 years within Equitable Bank. As part of EQB, ACM has the
support to successfully scale in the years ahead."
Chad Mallow, President and CEO of
ACM said: "We're delighted to join EQB as we continue to bring
industry-leading asset management services to Canadian investors.
We believe that a partnership with EQB will further accelerate our
growth plans. We're excited to continue to service new and existing
clients while generating leading product solutions under the EQB
Inc. brand."
Combination Provides Immediate
Accretion, Opportunities for Accelerated Growth
- With a consistent track record of generating income while
protecting investor capital, ACM continues to see significant
opportunities for growth
- EQB is supportive of business expansion efforts of the ACM
leadership given the strong track record and ongoing investor
demand for alternative assets in Canada
- ACM will further diversify EQB's earnings, with growth in
fee-based revenue
- EQB expects EPS accretion from the acquisition within the year
following transaction closing
- ACM will add 2,000+ client relationships, both investors and
borrowers, to EQB
ACM Celebrates 30 Years of Growth
and Performance
- Co-founded by Al Collings and
Gord Allan in 1993, ACM has grown to be one of the largest
alternative asset managers in its niche and provides consistent
returns to its investors through strong risk management practices
and conservative portfolio management strategies
- Under the leadership of President & CEO Chad Mallow and Chief Operating Officer
Chad Mercer (its second-generation
executive team), ACM has nearly doubled its assets under management
over the past five years
- ACM is represented by approximately 40 employees in four
offices, with a strong investor base that includes more than 200
institutional clients across Canada
- Existing management will remain with the business, including
Messrs. Mallow and Mercer, both leaders of ACM for more than 10
years
- Will operate as an independent majority owned subsidiary of EQB
Inc.
- Represents an asset class well understood by EQB as the owner
of Equitable Bank, which has a commercial loan portfolio of
$28 billion (70% of that invested in
multi-unit residential housing) and a proven lending approach and
risk management
Unanimous Approvals Given by All Parties to the
Acquisition
The acquisition has been unanimously approved by the Boards of
Directors of EQB, ACM and all shareholders of ACM.
Fully Financed Acquisition
EQB is leveraging cash to complete the acquisition, supported by
existing lending facilities at EQB, and a de minimis number of EQB
shares to be issued at closing at a price based on the volume
weighted average trading price. The issuance of any EQB shares is
subject to TSX acceptance or approval.
Transaction Advisors
McCarthy Tetrault LLP is acting as legal advisor to EQB, Borden
Ladner Gervais LLP is acting as legal advisor to ACM, and Fort
Capital Partners is acting as financial advisor to ACM.
Closing Expected Prior to End of Calendar 2023
The acquisition is expected to close prior to end of calendar
December 31, 2023 (EQB's fiscal year
2024, which starts November 1, 2023)
and is subject to customary closing conditions and receipt of
required regulatory approvals. EQB next reports Q4 and full year
fiscal 2023 results on December 7,
2023.
"Wealth management, and the many market segments it represents,
is strategic to EQB and we believe this acquisition is directly on
point for us with the underlying focus on Canadian commercial
assets and providing exceptional service to customers. With these
new capabilities, deep management team and dynamic range of
long-term clients, this accretive acquisition will build on the
diversification and momentum of EQB and the differentiated
solutions we offer to Canadians. It addresses our goal of growing
and diversifying fee-based revenue, and ACM aligns extraordinarily
well to our risk appetite and approach to ROE and value creation,"
said Chadwick Westlake, Chief
Financial Officer of EQB.
Analyst Conference Call and Webcast: 9:00 a.m. Eastern Today
EQB will host an investor call to discuss the acquisition today,
October 3, 2023, at 9:00 a.m. ET. The call will include
Chadwick Westlake, CFO of EQB.
To access the call live, please dial (416) 764-8668 five
minutes prior to the start time. The listen-only webcast with
accompanying slides will be available at
eqbank.investorroom.com/events-webcasts.
Call Archive
A replay of the call will be available until October 10, 2023 at midnight at (416) 764-8677
(passcode 929640 followed by the number sign). Alternatively, the
webcast will be archived at
eqbank.investorroom.com/events-webcasts.
About EQB Inc.
EQB Inc. and its subsidiaries are driving change in Canadian
banking to enrich people's lives. EQB Inc. trades on the
Toronto Stock Exchange (TSX: EQB and EQB.PR.C) and has nearly
$108 billion in combined assets under
management and administration as of June 30,
2023. The wholly owned subsidiary of EQB, Equitable Bank,
Canada's Challenger
BankTM, is the seventh largest bank in Canada by assets and serves over 543,000
Canadians.
About ACM Advisors
ACM Advisors is a leading Canadian institutional alternative
asset manager with $4.8 billion in
assets under management across four funds. Founded in 1993, ACM has
grown to be one of the largest private investment fund managers in
Canada, specializing in the
creation, structuring and management of pooled Canadian commercial
mortgage funds. Based in Vancouver,
BC, ACM has 30+ year track record of successful
performance.
For More Information:
Sandie Douville
Vice President, Investor Relations & ESG Strategy
investor_enquiry@eqbank.ca
437-855-5938
Cautionary Note Regarding
Forward-Looking Statements
Statements made by EQB in the sections of this news release, in
other filings with Canadian securities regulators and in other
communications include forward-looking statements within the
meaning of applicable securities laws (forward-looking statements).
These statements include, but are not limited to, statements
about the expected closing of the acquisition, receipt of
regulatory approvals, expected EPS accretion from the acquisition,
the issuance of EQB stock in connection with the
acquisition, EQB's objectives, strategies and initiatives,
financial performance expectations and other statements made
herein, whether with respect to EQB's businesses, ACM or the
Canadian economy. Generally, forward-looking statements can be
identified by the use of forward-looking terminology such as
"plans", "expects" or "does not expect", "is expected", "budget",
"scheduled", "planned", "estimates", "forecasts", "intends",
"anticipates" or "does not anticipate", or "believes", or
variations of such words and phrases that state that certain
actions, events or results "may", "could", "would", "might" or
"will be taken", "occur" or "be achieved", or other similar
expressions of future or conditional verbs. Forward-looking
statements are subject to known and unknown risks, uncertainties
and other factors that may cause the actual results, level of
activity, closing of transactions, performance or achievements of
EQB to be materially different from those expressed or implied by
such forward-looking statements, including but not limited to risks
related to capital markets and additional funding requirements,
fluctuating interest rates and general economic conditions,
legislative and regulatory developments, changes in accounting
standards, the nature of our customers and rates of default, and
competition, as well as those factors discussed under the heading
"Risk Management" in the MD&A and in EQB's documents filed on
SEDAR at www.sedar.com. All material assumptions used in making
forward-looking statements are based on management's knowledge of
current business conditions and expectations of future business
conditions and trends, including their knowledge of the current
credit, interest rate, and liquidity conditions affecting EQB, its
subsidiaries, and the Canadian economy. Although EQB believes the
assumptions used to make such statements are reasonable at this
time and has attempted to identify in its continuous disclosure
documents important factors that could cause actual results to
differ materially from those contained in forward-looking
statements, there may be other factors that cause results not to be
as anticipated, estimated or intended. Certain material
assumptions are applied by EQB in making forward-looking
statements, including without limitation, assumptions regarding its
continued ability to fund its mortgage business, a continuation of
the current level of economic uncertainty that affects real estate
market conditions, continued acceptance of its products in the
marketplace, as well as no material changes in its operating cost
structure and the current tax regime. There can be no assurance
that such statements will prove to be accurate, as actual results
and future events could differ materially from those anticipated in
such statements. Accordingly, readers should not place undue
reliance on forward-looking statements. EQB does not undertake to
update any forward-looking statements that are contained herein,
except in accordance with applicable securities laws.
Non-Generally Accepted Accounting
Principles ("GAAP") Financial Measures
This news release references certain non-GAAP measures, such as
Return on equity (ROE), Adjusted EPS, Book value per common share,
Assets under management, Conventional loans, CET1 ratio, Efficiency
ratio, Loans under management, Liquid assets, which management
believes provide useful information to investors regarding EQB's
financial condition and results of operations. See the
"NON-GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP") FINANCIAL
MEASURES AND RATIOS" section of EQB's Q2 2023 Management's
Discussion and Analysis ("MD&A"). The MD&A provides a
detailed description of each non-GAAP measure and should be read in
conjunction with this release. The MD&A also provides a
reconciliation between all non-GAAP measures and the most directly
comparable GAAP measure, where applicable. Readers are cautioned
that non-GAAP measures often do not have any standardized meaning,
and therefore, may not be comparable to similar measures presented
by other companies.
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SOURCE Equitable Group Inc.