‘It is a growth story’

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This article was published 13/08/2020 (1919 days ago), so information in it may no longer be current.

After getting stalled by the pandemic, a complicated transaction has been completed that restructures Richardson GMP as well as the wealth management firm’s publicly traded parent company, GMP Capital Inc.

The result is that the Richardson family will be the principal sponsoring shareholder, at 40 per cent ownership, of GMP Capital, whose sole focus will now be on the wealth management business.

That business — Richardson GMP — currently has 19 offices across the country with about $29 billion of assets under administration.

In 2018, GMP Capital decided to get out of the investment banking business, which was sold at the end of last year, leaving Richardson GMP as its only business.

Before the transaction was announced on Thursday, Richardson GMP was owned roughly equally by Richardson Financial Group Ltd. (the Winnipeg Richardson family’s financial services arm), the Richardson GMP investment advisers and the shareholders of GMP Capital.

When it is all approved by the various stakeholders, the Richardsons will own about 40 per cent, the advisers will own 28.5 and the current GMP shareholders will have 31.5.

That final closing, scheduled for Oct. 6, will also signal a name change for the wealth management business from Richardson GMP to Richardson Wealth.

The name of the publicly listed entity will also change from GMP Capital, to a new as-yet-undetermined name.

Sandy Riley, CEO of Richardson Financial Group Ltd., said the complicated transaction clarifies the future of the company in the form of a public entity that will help ensure the growth of the firm.

“The business has lots of oxygen in the form of capital to support growth and that’s the real objective,” he said. “It is a growth story. It’s not about the financial engineering that goes into getting us to the starting point.”

The combination of the two companies — Richardson and GMP — began about 10 years ago when Richardson Partners, a then-fledgling wealth management firm, merged with GMP’s wealth management operation to form Richardson GMP.

At that time, the head office moved from Winnipeg to Toronto. (Richardson GMP currently has a sizable office and client base in Winnipeg.)

Kish Kapoor, acting CEO of GMP Capital, adds a further Winnipeg connection to the deal. Over the years, Kapoor held very senior executive positions at both Wellington West Capital and Assante Corp.

“The goal is to build a powerful independent platform with a sponsor like Richardson Financial whose focus is on the long term,” Kapoor said.

All the players believe there is a compelling case to be made for the growth of an advisory business, independent of the banks, to provide choice for the 1.6 million high-net-worth households in the country that currently represent a market of about $4.4 trillion.

“We think we have all the pieces… a great sponsor, a great network of advisers and a great client base,” he said. “I’m feeling really excited about this.”

Kapoor said the new name, Richardson Wealth, will help attract other top performing advisers. He said the idea is to eventually do some acquisitions and build up expertise in areas like asset management and insurance.

The valuation of the company has gone down from about $500 million, when the structure of the deal was first announced earlier this year, to about $425 million.

As well, the assets under administration fell after the lockdown but have since risen again by about $5 billion.

Riley said that is testimony to the excellence of its advisers.

“We have some of the best investment advisers in Canada,” Riley said. “They have been supportive of the transaction and are critical to our future success.”

martin.cash@freepress.mb.ca