First National sold to Brookfield, partner in $2.9 billion deal

12 hours ago 1
Billionaire Stephen SmithStephen Smith smiles after donating $50 million in 2015 to the Queen's School of Business in Kingston, which then had changed its name to the Smith School of Business. Smith's First National, which he co-founded, has been a winner for investors. Photo by Ian MacAlpine /The Kingston Whig-Standard/Postmedia Network

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Brookfield Asset Management Ltd. and a private equity partner reached a friendly deal to take over First National Financial Corp., a mortgage company backed by Canadian billionaire Stephen Smith, for about $2.9 billion.

Financial Post

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Funds managed by Brookfield and Toronto-based Birch Hill Equity Partners Management Inc. agreed to pay $48 a share in cash for First National, an originator of commercial and residential mortgages. That’s a 13 per cent premium to where the shares closed Friday.

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First National is controlled by Smith and Moray Tawse, who own 71 per cent of the company. They will sell about two-thirds of their holdings and roll the rest into the private company after the deal, according to a statement late Sunday.

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Smith co-founded the firm, which has been a winner for investors, generating a total return of more than 415 per cent over the past 10 years, including dividends, according to data compiled by Bloomberg. Jason Ellis is expected to stay on as First National’s chief executive, the companies said.

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First National’s main business is to originate primarily prime mortgages, working with independent brokers to find homebuyers in the single-family segment and funding the loans through institutional investors.

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