Canada's Biggest Marijuana Adviser Sees `Robust' Deals, More M&ABy
Canaccord Genuity Group Inc., Canada’s biggest financial adviser for pot deals, sees little threat from large banks for transactions in the nation’s expanding marijuana industry, Chief Executive Officer Dan Daviau said.
“Most of the money we’ve made in the sector is helping little companies grow to be very big companies, and we don’t really perceive bank competition in that area," Daviau said Wednesday on a conference call after reporting fiscal third-quarter earnings. “We’d welcome it -- they wouldn’t stand a chance."
Daviau said he’d be “quite happy” to see more involvement in cannabis from large Canadian lenders, such as Bank of Montreal’s participation in a January stock sale for Canopy Growth Corp. that raised C$200.7 million ($160 million). Such involvement -- the first by a big domestic bank -- adds further credibility to the nascent industry, improves valuation and broadens distribution, he said.
Pot deals helped fuel investment-banking gains for Canaccord in the quarter ended Dec. 31, with total net income rising eightfold to C$36.6 million from a year earlier and revenue totaling a record C$309.4 million, the company said in a statement.
Toronto-based Canaccord highlighted C$568 million of cannabis deals in the quarter, including two for Aurora Cannabis Inc. and a C$125 million initial public offering for Cannabis Strategies Acquisition Corp. The firm reported a total of 141 global investment-banking transactions raising proceeds of C$9.1 billion during the period.
“The financing activity continues to be robust," Daviau said. “You’ve also seen some M&A pop up in the sector. These companies are no longer small companies."