Amid the doom and gloom of the resource markets, two small cap focused boutique investment firms have decided to combine their shops in an attempt to gain size and weather the storm.
This morning, Toronto-based Mackie Research announced it would be acquiring the oil and gas boutique, Jennings Capital.
Jennings was founded in Calgary by Rob Jennings in 1993 and has grown to one of the largest privately held investment firms in Canada.
No details on the transaction terms were disclosed, but in an interview with the Globe and Mail’s Niall McGee, Mackie Research president, Geoff Whitlam said they would be buying them with a bit of cash, but it would predominately be a stock transaction.
Mr. Whitlam said that the main reason Mackie wanted Jennings was for its domestic oil and gas investment banking team which Mackie has no exposure to.
Mackie, although heavily focused in the small-cap space, does benefit from some diversification in the wealth management and private client businesses. Jennings, on the other hand, is a junior natural resources firm that has been rocked by the past +3 year “correction” in the sector.
Like many of their peers who have merged, sold or shut down, Jennings main lifeline are the revenues that come from financing junior mining and oil companies.
Other independents that have disappeared over the past few years include:
- Stifel Nicolaus Canada
- Fraser Mackenzie
- Stonecap Securities
- Casimir Capital Canada
The deal is expected to close in December.
Read: Mackie Research to buy Jennings Capital (Subscription Required)