Canaccord reports record revenues, drops proposal to acquire RF Capital

Canaccord Genuity Group Inc. reported a $139-million profit for its most recent quarter on Tuesday, as the firm said it’s withdrawing its proposal to acquire RF Capital Group Inc.

Canaccord has been pursuing its rival independent wealth manager since last fall and made its takeover proposal public earlier this year. President and CEO Dan Daviau said in March that acquiring Richardson Wealth was Canaccord’s “No. 1 strategic priority.”

Richardson’s management has repeatedly rebuffed the proposals, however, and recently released its own growth strategy.

On Tuesday, Canaccord said it was withdrawing its proposal to acquire RF Capital but would continue to focus on its recruiting strategy and organic growth opportunities.

“The proven track record of growth and profitability in our Canadian wealth management business continues to drive recruiting opportunities amongst established [investment advisor] teams who recognize the value of our market position, and the advanced technology and product offerings that support them in growing their businesses,” the firm said.

Canaccord’s Q4 net income of $139.4 million was up from $26.2 million a year ago, and $68.5 million the previous quarter. Net income of $269.8 million for fiscal 2021 compared to $86.6 million the previous year.

Fourth-quarter revenue, excluding significant items, was $692.3 million, and annual revenue was $2.0 billion — the highest quarterly and annual revenues on record.

In a release, Daviau attributed the results to the firm’s global platform and employee efforts.

While activity levels in the firm’s core mid-market focus areas could moderate in the coming quarters, Daviau said, “we are pleased to be starting fiscal 2022 with an even stronger wealth management franchise, expanded market share in our core sectors and geographies, and compelling prospects for expanding our product capabilities.”

Global wealth management saw record revenue of $199.2 million in the fourth quarter and $663.6 million for the year, representing increases of 44.4% and 29.8% over prior year results for the same periods.

Total client assets in global wealth management at the end of Q4 increased by 46.2% year over year to $88.8 billion.

Client assets in the firm’s Canadian wealth management business grew 75% year over year to $32.2 billion. The segment earned pre-tax net income of $62.6 million for the fiscal year, an increase of 176.4% over the prior year.

The firm’s fourth-quarter common share dividend was $0.075 per share, and total common share dividends for fiscal 2021 increased 25% year over year, reflecting continued strong contributions from the global wealth management segment, the firm said.

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