Here are the top reads on deals and financial services over the last week. Have a great weekend,
Inside the fall of Fortress: By the time the RCMP raided the offices of Fortress Real Developments Inc. on April 13, Mario Narciso and his wife, Fernanda Cortes, had already started to worry they’d made a bad investment. Four years ago, Mr. Narciso was framing a roof in Toronto when he fell several metres, breaking his spine and leaving him partially paralyzed. Confined to a wheelchair and unable to work, the now 58-year-old received a $500,000 insurance settlement to help support himself, Ms. Cortes and their daughter, now five years old. The couple wanted to put the money into a safe, income-generating investment but had little experience with investing. An acquaintance introduced them to an adviser well-known in Toronto’s Portuguese community, who suggested one of their best options was to invest in a so-called syndicated mortgage, a pool of funds that would help finance early-stage real estate projects. Story (Janet McFarland, for subscribers)
Apotex heirs face daunting decisions a year after Sherman murders: It has been a year since his parents were found murdered in their Toronto home – no arrests have been made and the family is offering a $10-million reward to anyone who can help solve the crime. Jonathon Sherman joined Apotex’s four-person board early this year and has emerged as a key decision maker in a restructuring of one the world’s largest generic drug makers. Outside and inside Apotex, there’s a widespread expectation that the family and executive team are polishing up the business as the prelude to a sale. In the not-too-distant future, rival drug makers, pension funds and private equity firms are expected to take part in an auction in which bidding would start in the $4-billion range, according bankers and legal advisers familiar with the company. Story (Andrew Willis, for subscribers)
Doug Ford needs to step back and let Hydro One’s board do its job: A central pillar of Doug Ford’s election platform was bringing Ontario’s hydro rates down. He erroneously claimed that replacing Hydro One’s board of directors and CEO was a means to this end. This faulty assumption bears little relationship to the fact that Ontario’s hydro rates are set by the Ontario Energy Board. Intervening in Hydro One’s governance was sure to damage the corporation. And that it has. Opinion (Anita Anand)
CI Financial buys majority stake in Vancouver’s Wealthbar: Investment giant CI Financial is stepping into the digital-advice business after acquiring a majority stake in robo-adviser Wealthbar Financial Services Inc. Story (Clare O’Hara, for subscribers)
Echelon Wealth Partners acquires Dundee Securities: Echelon Wealth Partners Inc. is acquiring Dundee Securities Ltd., adding almost $1-billion in assets under administration and management. Story (Clare O’Hara, for subscribers)
Detour Gold CEO to step down after proxy battle ends in board revamp: Detour Gold Corp. shareholders have ousted its chairman and chief executive officer in a proxy contest that is a partial victory for dissident shareholder Paulson & Co. In a result that was made public on Thursday, shareholders voted five incumbents off the nine member board. It will now be up to the board to decide whether a sale is in its best interests. Story (Niall McGee, for subscribers)
SNC-Lavalin vulnerable to foreign takeover, Quebec premier says: Premier says SNC-Lavalin Group Inc. is exposed to a takeover amid growing evidence Quebec’s his government is marshalling an effort to ensure the engineering and construction firm remains based in the province. Premier François Legault told an interviewer for a popular morning radio show in Montreal Thursday that government officials have “indications” that the engineering company is the subject of interest from foreign buyers. Story (Nicolas Van Praet, for subscribers)
Rising rates, high debt could lead to financial crisis in Canada, report warns: Canada risks a financial crisis within three years as rising interest rates collide with already lofty levels of indebtedness, a Citigroup report warns. Several other countries are also vulnerable, according to the Citi report titled, “Are we headed for a global debt crisis?” It estimates that governments, households and corporations around the world have amassed a mountain of loans roughly three times as large as the level of 20 years ago. Story (Ian McGugan, for subscribers)
Banks face stiffer capital rules to buffer a debt-led downturn: Canada’s banking regulator will require large banks to hold more capital to guard against looming risks to the economy, including high levels of household and corporate debt. The Office of the Superintendent of Financial Institutions (OSFI) said on Wednesday it is raising the so-called “domestic stability buffer,” an added cushion that Canada’s six largest banks are required to build into their core capital reserves to help them cope in an economic downturn. Starting April 30, 2019, the buffer will rise to 1.75 per cent of a bank’s risk-weighted assets, up from the current 1.5 per cent. Story (James Bradshaw, for subscribers)
GMP Capital’s global expansion peters out with sale of U.S. debt division: GMP Capital’s near-decade of international expansion is ending, with the independent dealer selling its U.S. fixed-income division. GMP acquired the New York-based business, formerly known as Miller Tabak Roberts Securities, in 2011 for US$44-million. The sale price was not disclosed, but the business had been struggling of late. Story (Tim Kiladze, for subscribers)
Mackenzie Financial faces $175-million class-action lawsuit over advice fees: A third investment fund manager may be held accountable for do-it-yourself investors being charged millions of dollars in fees for advice they are not receiving, according to a recent lawsuit filed against Mackenzie Financial Corp. Two Ontario-based law firms, Siskinds LLP and Bates Barristers PC, have filed a $175-million class-action lawsuit against Mackenzie Financial, claiming that investors who bought the firm’s funds through discount brokers were overcharged because certain funds paid a trailing commission that included a fee for advice. Story (Clare O’Hara, for subscribers)
Vancouver entrepreneur whose last business was sold to PayPal for $400-million expands new fintech for banks: A Vancouver entrepreneur whose previous business was acquired by PayPal Holdings Inc. for $400-million is set to announce a key partnership with JPMorgan Chase & Co. for her latest financial-technology venture. Lisa Shields founded FI.SPAN in 2016, a year after she stepped down as chief executive of Hyperwallet Systems Inc. Story (Josh O’Kane, for subscribers)
The Big Six made $45.3-billion this year. Who’s shining brightest?: Fans of Canadian bank stocks will appreciate this number: $45.3-billion. That’s the total profit generated by the Big Six banks in fiscal 2018 (which ended Oct. 31), and the gargantuan number reinforces why the banks have been delivering stellar gains and rising dividends over the long term. Story (David Berman, for subscribers)
Aphria splits with Stikeman after short-seller reports: Aphria Inc. and its long-time law firm, Stikeman Elliott LLP, are expected to cut ties after a deal by the cannabis company to buy assets in Jamaica, Colombia and Argentina came under heavy scrutiny from investors. Story (Andrew Willis, for subscribers)
Regulators cracking down on slapdash bookkeeping: Canadian regulators and rule makers are pushing ahead with their efforts to clean up the way companies report their numbers to investors. Story (David Milstead, for subscribers)
Hydro One’s governance issues called out by rating agency S&P: A leading debt-rating agency is warning about governance problems at Hydro One Ltd. after the state of Washington cited political interference from the Ontario government in rejecting the utility’s first major acquisition. Story (Tim Kiladze, for subscribers)
Quirky Canadian stock tickers now range from NERD to CARS to WEED: When Charlie Regan decided to take public his mobile IT services company, he knew right away what ticker symbol he wanted the stock to trade under: NERD. “That’s what the team is,” said Mr. Regan, the CEO of Nerds on Site Inc., which services small- to medium-sized businesses. “They’re nerds.” To his surprise, the ticker symbol was still available. “We were all quite shocked,” he said. “We locked it down right away.” Nerds on Site, which closed its initial public offering on the Canadian Securities Exchange (CSE) on Nov. 26, is one of a batch of companies getting creative with their stock tickers. Story (Alexandra Posadszki and David Milstead, for subscribers)
What crisis? Canada’s Big Six banks brush off oil-price crash: Canada’s largest banks are brushing off the recent crash in domestic-crude prices, confident that their loan books are in solid shape. Collectively, the Big Six banks reported $45-billion in annual profits for fiscal 2018, which ended on Oct 31. Yet on recent conference calls to discuss their fourth-quarter earnings, analysts pressed executives for details about their loan exposures to oil and gas companies, worried that a crisis could be brewing behind the scenes, resulting in large write-downs. Story (Tim Kiladze and Alexandra Posadzki, for subscribers)
How Canopy is pushing into the U.S. cannabis market while staying onside of TSX rules: Officially, Canopy Growth Corp. is steering clear of investments in the United States. Over the past year, however, Canada’s largest cannabis company and its affiliates have been quietly securing U.S. exposure through a series of legal manoeuvres that stay onside of Toronto Stock Exchange rules but position Canopy for a rapid move into the U.S. market. Since October, 2017, TMX Group Ltd., the exchange’s parent, has not let TSX-listed cannabis firms operate in the United States, where marijuana remains federally illegal. That has forced companies to think creatively, spinning off subsidiaries, swapping shares and lining up conditional warrants, which allow them to acquire future positions in U.S. companies. Story (Mark Rendell, for subscribers)
Does Paul Godfrey know when to walk away?: Earlier this year, billionaire hedge-fund manager Leon Cooperman asked Paul Godfrey the question many are wondering: Why does an executive who is nearly 80 years old continue to run a debt-heavy public company that cries out for reinvention? Mr. Cooperman has been snapping up shares in Postmedia Network Canada Corp. and now owns 14 per cent of the company that publishes the National Post, Calgary Herald, Ottawa Citizen and other digital and print publications across the country. Opinion (Andrew Willis, for subscribers)
MORE DEALS NEWS FROM FRIDAY
Luxury goods: LVMH has agreed to buy Belmond, the owner of hotels including Venice’s landmark Cipriani, for a total of $3.2 billion to raise its profile in upmarket hospitality. Story (for subscribers)
Real estate: Oxford Properties Group has acquired the Investa Office Fund, a portfolio of 19 properties in Australia, for $3.3-billion. Story (for subscribers)
The Streetwise newsletter is Tuesday to Saturday. If you’re reading this on the web, or if someone forwarded this e-mail to you, you can sign up for Streetwise and all Globe newsletters on our signup page.