Acquisition-focused companies meet soaring demand on Bay Street

Mon Jul 6, 2015 5:51pm EDT
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By John Tilak and Euan Rocha

TORONTO (Reuters) - A raft of Canadian companies set up with a mandate to make acquisitions and led by prominent Bay Street names is taking advantage of buoyant capital markets and strong demand from institutional investors.

Several other such vehicles are set to flood the Canadian market this year and are in the process of pitching their cases, said three banking sources who are familiar with the plans but are unauthorized to speak publicly about them.

With choppy commodity prices, large Canadian institutional fund managers are looking for ways to deploy capital beyond the resource sectors.

Special Purpose Acquisition Corporations (SPACs), which raise capital and trade publicly, aim to make acquisitions within a certain timeframe. They are reporting phenomenal investor interest, with most of these offerings oversubscribed.

SPACs have a longer history in the United States, where their popularity has been growing. Recent regulatory changes have cleared the path for listings in Canada as well.

"The regulatory burden has been removed and as a result the market has opened up," said Neil Selfe, chief executive of INFOR Acquisition Corp IACa.TO, noting that about 92 percent of the company's investor base comprises Canadian institutions and pension plans.

"It's a very active M&A market," he added. "Investors are looking for ideas outside of resources. We're looking to take advantage of that."

INFOR's board includes CI Financial (CIX.TO: Quote) Chairman William Holland and Element Financial (EFN.TO: Quote) CEO Steven Hudson.   Continued...