GMP Capital Inc., one of Canada’s leading independent financial services firms, with international operations, has overhauled its Capital Markets group and cut 25% of staff, citing “technology-driven disintermediation and increased regulation, and the sustained trough in the global commodity cycle.”
The firm has exited its U.K. and Australian businesses, closing its London, Perth and Sydney offices. Additionally, the U.S. energy business was “rationalized” and Canadian capital markets group “streamlined.”
The new GMP has 97 fewer employees, a 25% reduction over Q3 2015. The restructuring is expected to result in more than $40 million in annual savings. GMP will incur a one-time restructuring charge of $15 million in Q4 2015.
“It’s very painful to part with good people,” Harris Fricker, chief executive officer of GMP and a co-founder of Elon Musk’s X.com, which became Paypal, told Globe and Mail.
“We emerge from this restructuring a leaner and more focused business better able to weather prolonged periods of market and industry turbulence and to successfully compete in our core markets through all aspects of the cycle,” Mr. Fricker commented in a company news release.
The changes will help GMP refocus on its North American operations, which generated 93% of 2015 revenue.
Citing data from the Investment Industry Association of Canada, the Globe and Mail reports more than 50 Canadian boutique firms have shuttered or sold in the last three years.
“On the other side of this maelstrom you’re going to see an entirely different competitive landscape with a lot fewer operators,” Mr. Fricker told the Globe. “We can definitely weather the storm.”
GMP Capital Inc. was founded in 1995 and has played a significant role in the financing of countless natural resources and technology ventures. The business consists of the Capital Markets Group and a non-controlling interest in Richardson GMP Limited, the largest independent wealth management firm in Canada.
Learn more about GMP in this 2011 Report of Business feature by Boyd Erman.