A veteran Canadian dealmaker and a London investment banker are front-runners to be the next chief executive officer at Canaccord Genuity Group Inc., people familiar with the process said.
The contenders are Daniel Daviau, the executive responsible for about half of the Toronto-based financial-services firm’s revenue, and Alexis de Rosnay, the son of a French baron and a former banker at companies including JPMorgan Chase & Co. and Lehman Brothers Holdings Inc., said the people, who asked not to be identified because the process is private. Both men will present their business plans to the board next month.
Whoever wins the top job faces the task of turning around a company whose shares have plunged 47 percent in the past 12 months amid volatile global markets that pared its capital markets business. Paul Reynolds, who’d been CEO since 2007, died in April at age 52 of heart-related complications that arose during the swim portion of a triathlon in Kona, Hawaii.
“All of Alexis’s experience is in the U.K. and Europe and all of Dan’s is North America,” Paul Holden, a CIBC World Markets analyst, said in a phone interview. “Paul was that rare case where he had professional experience both in North America and in Europe, so that could be a challenge for either of them.”
Daviau, 50, head of North American capital markets, has been with the firm since its 2010 takeover of Genuity Capital Markets, a business he helped start with David Kassie, who’s now chairman and acting CEO of the combined company. De Rosnay, 48, joined three years ago as CEO of the U.K. and Europe operations, which includes capital markets and wealth management, and runs Canaccord Genuity’s largest operation by assets and employees.
Scott Davidson, a Canaccord Genuity spokesman, said the company’s board is reviewing two internal candidates, without naming them, and expects “to appoint a new CEO in the fall.” He said Kassie, 60, will become executive chairman after a new CEO is chosen. Daviau and de Rosnay declined to comment.
The next CEO inherits a 65-year-old company with about 1,900 employees that offers investment banking, trading and wealth management in 10 countries. Canaccord is coming off a C$11.3 million ($8.7 million) net loss for the year ended March 31 on restructuring costs and a capital markets slump. Wealth management has been problematic, with North American operations posting three straight years of losses.
“One of the primary challenges would be the Canadian wealth-management platform,” said CIBC’s Holden, who rates the stock outperform. “It’s probably relatively a little bit undersized, which is pressuring profitability.”
Profit at the U.K. wealth-management business -- part of de Rosnay’s responsibility -- has tripled over three years, driven by takeovers including the 2012 purchase of British brokerage Collins Stewart Hawkpoint Plc. Canaccord Genuity reiterated last month that it’s seeking to double U.K. wealth assets under management through takeovers.
Still, Canaccord Genuity remains primarily an investment bank and brokerage, with 70 percent of revenue from capital markets, according to financial statements. Two-thirds of that comes from Canada and the U.S., which is Daviau’s wheelhouse.
Daviau, who has an MBA from Toronto’s York University and a law degree from its Osgoode Hall Law School, started at Canadian Imperial Bank of Commerce’s CIBC World Markets in 1991. He quit in April 2004 and helped Kassie and other ex-CIBC bankers establish Genuity Capital Markets.
Canaccord’s takeover of Genuity brought Daviau to the firm, where he now divides his time between Toronto and New York. Daviau received C$11.7 million in compensation for the last fiscal year, surpassing payouts for Canada’s top bank CEOs. His pay included a C$8.64 million bonus.
De Rosnay joined Canaccord Genuity in September 2012 and under his oversight the U.K. and Europe operations generated record revenue. His career includes leadership roles at Lazard Ltd., Lehman Brothers and JPMorgan in London and New York, and about five years at Rothschild in Paris and London.
A graduate of Montreal’s McGill University, he’s the son of Joel de Rosnay, a Mauritius-born French baron and molecular biologist with a Ph.D from Massachusetts Institute of Technology. His mother is Stella Jebb, daughter of British diplomat and life peer Lord Gladwyn.
Canaccord Genuity’s performance has disappointed investors such as Greg Eckel at Morgan Meighen & Associates. The shares have fallen 9.3 percent this year, compared with the 2.3 percent decline of the Standard & Poor’s/TSX Composite Index. Eckel’s Toronto-based firm sold the last of its Canaccord Genuity holdings this year.
“Comparables were getting tougher to match and there was some disappointments on earnings and costs,” Eckel said in a July 13 phone interview.
Still, Eckel likes Canaccord Genuity’s diversified operations, and is impressed with management despite the share performance.
“I continue to watch it from afar,” he said.