Quadravest Capital Management has announced:
Financial 15 Split Corp. (the “Company”) is pleased to announce it will undertake an offering of Preferred Shares and Class A Shares of the Company. The offering will be co-led by National Bank Financial Inc., CIBC World Markets Inc., Scotia Capital Inc. and RBC Capital Markets, and will also include BMO Capital Markets, Canaccord Genuity Corp., Industrial Alliance Securities Inc., Echelon Wealth Partners, GMP Securities L.P., Raymond James Ltd., Desjardins Securities Inc., Mackie Research Capital Corporation, and Manulife
Securities Incorporated.The Preferred Shares will be offered at a price of $9.90 per Preferred Share to yield 5.6% and the Class A Shares will be offered at a price of $10.30 per Class A Share to yield 14.6%.
The closing price on the TSX of each of the Preferred Shares and the Class A Shares on May 22, 2018 was $10.13 and $10.49, respectively.
Since inception of the Company, the aggregate dividends paid on the Preferred Shares have been $7.60 per share and the aggregate dividends paid on the Class A Shares have been $17.89 per share, for a combined total of $25.49. All distributions to date have been made in tax advantage eligible Canadian dividends or capital gains dividends.
The net proceeds of the offering will be used by the Company to invest in an actively managed, high quality portfolio consisting of 15 financial services companies made up of Canadian and U.S. issuers as follows:
Bank of Montreal National Bank of Canada Bank of America Corp. The Bank of Nova Scotia Manulife Financial Corporation Citigroup Inc. Canadian Imperial Bank of Commerce Sun Life Financial Services of Canada Inc. Goldman Sachs Group Inc. Royal Bank of Canada Great-West Lifeco Inc. JP Morgan Chase & Co. The Toronto-Dominion Bank CI Financial Corp. Wells Fargo & Co. The Company’s investment objectives are:
Preferred Shares:
i. to provide holders of the Preferred Shares with fixed, cumulative preferential monthly cash dividends currently in the amount of 5.50% annually, to be set by the Board of Directors annually subject to a minimum of 5.25% until
2020; and
ii. on or about the termination date, currently December 1, 2020 (subject to further 5 year extensions thereafter), to pay the holders of the Preferred Shares $10.00 per Preferred Share.Class A Shares:
i. to provide holders of the Class A Shares with regular monthly cash dividends in an amount to be determined by the Board of the Directors; and
ii. to permit holders to participate in all growth in the net asset value of the Company above $10 per Unit, by paying holders on or about the termination date of December 1, 2020 (subject to further 5 year extensions thereafter) such amounts as remain in the Company after paying $10 per Preferred ShareThe sales period of this overnight offering will end at 9:00 a.m. EST on May 24, 2018. The offering is expected to close on or about May 31, 2018 and is subject to certain closing conditions including approval by the TSX.
So Whole Units are being offered for 20.20 and the NAVPU as of May 15 was 17.76! That’s a premium of a little under 14%! Holy smokes, but it’s a nice business when it works, eh?
Update, 2018-5-26: The offering was successful:
Financial 15 Split Corp. (the “Company”) is pleased to announce it has completed the overnight marketing of up to 5,159,000 Preferred Shares and up to 5,159,000 Class A Shares of the Company. Total proceeds of the offering are expected to be approximately $104.2 million.
Hi Mr. Hymas,
I ordered 35,000 shares of FTN.PR.A prior to the deadline at 8:10 AM on May 24th through my broker (National Bank Direct Brokerage) and I just called this morning (May 25th) to see how many shares I got, only to be told that I had got NONE!
Apparently the rep sent the order to their transactional desk at 8:10 AM and the transactional desk sent the request at “a quarter past 8”. So well before the 9:00 AM deadline.
So I asked the rep for an explanation, and he told me that this new issue was apparently very popular. So I asked him if the orders were prorated, and that if this was the case, for my order of 35,000 shares to get absolutely NO share that meant the issue was oversubscribed by more than 350 times (if I can’t even get a 100 shares board lot on an order of 35,000 shares, then 35,000/100 = 350 times). But he told me that it was probably on a “first come, first serve” basis. But I told him their office open at 8:00 AM, and before I get through their phone menu I only got a rep around 8:03 AM. But then he told me it was probably based on another rule.
So I asked him if I had to be part of some circle of their favourite customers in order to get some shares, and if so how much money should I have with them to join this favourite group, and he told me that he wasn’t aware of any sort of group of favourite customers at his firm.
In the end he told me that in order to increase my chances of getting any shares, I would have had to order both class A and class P preferred shares. But I told him that there were no such class P shares of FTN.PR.A in existence, and I asked him if he meant instead that I would have increased my chances by ordering both common and preferred shares, and he said yes.
So Mr. Hymas, I’m wondering if you have any remark concerning this strange situation. Or is it even strange at all? Any hint from you would help.
My guess is that the allocation for National Bank Financial all went to their full-service customers and that discount brokerage customers suck hind titty.
Another factor could be that you were only interested in the preferreds, which are the easy ones to sell. It would be perfectly defensible to fill all orders for Whole Units prior to filling any orders for preferreds.
But that’s only a guess. I really have very little insight into how the new issue market works; since most new issues are overpriced, I’ve never paid much attention.
Mr. Hymas,
Thank you.