Home Capital Rallies Amid Reports of Private Equity OffersBy and
Stock up most since May 11 on reports Onex, Brookfield looking
Home Capital also in talks to settle with regulators: report
Home Capital Group Inc., Canada’s embattled alternative mortgage lender, rallied as much as 12 percent on a report that the company received preliminary takeover offers from firms including Brookfield Asset Management Inc. and Onex Corp.
The stock rose 11 percent to C$10.67 at 3:30 p.m. in Toronto, the biggest gain in more than three weeks, after the Globe and Mail reported that Home Capital received proposals from Onex, Canada’s largest publicly traded private equity firm, and Brookfield, the largest alternative asset manager. The offers were “speculative” and “not attractive,” the report said. The newspaper also said that executives were in discussions with the Ontario Securities Commission to settle accusations about improper disclosures to shareholders.
Representatives for Home Capital and Onex didn’t immediately respond to requests seeking comment. Brookfield and the OSC declined to comment.
Home Capital is in a holding pattern as a refreshed board of directors is seeking new executives to lead the company after a crisis of confidence led to a run on the bank and a drop in share price. Board member Alan Hibben said last month that a sale of the company would be a last resort. Still, the company is not ruling out a sale, according to people familiar with the talks who said Onex and Brookfield are speaking with Home Capital. They spoke on condition they not be identified as the talks are private.
The OSC has started hearings against the lender and former executives, including founder and ex-Chief Executive Officer Gerald Soloway, accusing them of failing to disclose information on mortgage fraud.
Home Capital still lingers about 80 percent below its 2014 record high. The new management team so far has been unable to make good on its top priorities: hiring a new chief executive officer and replacing the C$2 billion ($1.5 billion) credit line from a group led by the Healthcare of Ontario Pension Plan.
The company is trying to fill the CEO slot first, before seeking a refinancing of the costly credit line, the people said.