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Email this11:49 am
December 12, 2009
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Likely anticipating the slowing to nil lending growth in the next couple of years, EQB Inc. has announced an agreement to acquire 75% of Vancouver, B.C.-based ACM Advisors Ltd. using a combination of cash on hand and existing EQB credit facilities. What is ACM Advisors Ltd.? It's an alternative asset manager mainly to high net-worth individuals and corporations/charitable endowments, but also retail accredited investors (using the stricter definition of accredited investor with higher net worth requirements). Digging deeper, it constructs and manages mortgage investment funds. Specifically, about $3.8 billion in commercial mortgages through ACM Commercial Mortgage Fund, about $850 million in residential mortgages through ACM Mortgage Fund I and II, and about $100 million through a debenture fund (likely mostly commercial mortgages). Source: https://www.acma.ca/funds
ACM Advisors plans to remain a majority-owned EQB Inc. subsidiary, but does say it plans to adopt the EQ Bank brand on its mortgage funds and, potentially, as the name of the subsidiary.
I suspect it will remain non-consolidated from the EQB Inc. balance sheet and accounted for using the equity method of accounting.
ACM is indeed one of the larger MIC fund managers, though, that I hadn't heard of...it makes me wonder if EQB plans to make a run for an even larger 'fish' like Romspen?
Or maybe MCAN Mortgage Corporation? Or an eventual combination with Home Capital Group, which Smith Financial Corporation could swap for a significantly larger equity equity in EQB Inc.
Cheers,
Doug
11:52 am
October 27, 2013
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You think? There is danger over at Romspen https://www.theglobeandmail.com/business/article-private-mortgage-lender-romspen-cuts-monthly-distribution-for-fourth/
As for EQB itself, I doubt Smith wants to be in the 'public traded' eye more than it is.
11:57 am
December 12, 2009
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AltaRed said
You think? There is danger over at Romspen https://www.theglobeandmail.com/business/article-private-mortgage-lender-romspen-cuts-monthly-distribution-for-fourth/
I wouldn't rule it out, for the right price. If they were able to acquire a significant alternative mortgage portfolio like that at a significant discount to the Romspen funds' NAV, they seem more willing than, say, the Big Five banks to do a deal like that. At the end of the day, the issues with Romspen are cash flow related due to some higher than average delinquencies; there's no suggestion they have weak assets. EQB may just be willing to be patient and, where required, foreclose on the most delinquent borrowers.
As for Smith Financial, I don't think privatizing the financials was the main reason for acquiring Home Capital Group. I think he was frustrated by the lack of growth and solid assets. I think he may have been frustrated with the current management team's business strategy, and wouldn't be surprised to see the current HCG CEO given the boot in the next 6-12 months. After all, one of his biggest assets is his stake in First National Financial.
That said, acquiring the remainder of ACM Advisors and/or MCAN Mortgage Corp. may be the more likely outcomes. They could also take out another publicly-traded MIC or two, potentially Builders Capital or Atrium. Firm Capital is less likely due to the insider control of the Firm Capital group of companies.
Cheers,
Doug
9:13 am
January 10, 2017
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Went over to see what ACM is all about at https://www.acma.ca/funds
Not much info on their site about the holding/performance of their funds.
Had to go to https://www.morningstar.ca/ca/report/fund/performance.aspx?t=0P00009QHX
to find the performance of their ACM Commercial Mortgage Series F, for example.
Performance appears mediocre. Probably why their site does not show it and why they are selling 75% of it.
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