Canadian billionaire Stephen Smith has hired a former investment banker from Toronto-Dominion Bank to run his family holding company as he looks to acquire more North American financial services companies.
Jonathan Broer will become president of Smith Financial Corp. after more than 16 years at Toronto-Dominion, including time leading the financial institutions group in Canada and the investment banking division in Europe and the Asia-Pacific region. He also previously worked at Genuity Capital Markets and the Canadian Imperial Bank of Commerce.
“There’s a broad mandate to expand in financial services, not just in Canada but in North America,” Smith, 71, said in an interview. “Lots of opportunities are coming in, and I think I’m missing opportunities because I don’t have the infrastructure.”
The acquisitions may range from the low to high hundreds of millions of dollars and could be in both private and public markets, Smith said. He added that he’ll be open to diversifying the types of businesses he owns, as long as the targets are undervalued.
The hire comes three months after Smith struck a C$1.7 billion ($1.3 billion) deal to buy Canadian alternative-mortgage lender Home Capital Group Inc., which would add the company to his C$5 billion portfolio of personal holdings. Those assets include stakes in First National Financial Corp., the alternative lender Smith co-founded in 1988; Canada Guaranty Mortgage Insurance Co.; a pair of banks; a proxy advisory firm; and a private equity manager.
The Home Capital purchase was negotiated in the midst of the Canadian housing market’s steepest correction in years. In 2010, Smith bought the mortgage insurance business from American International Group Inc. when it was forced to sell operations in the wake of the financial crisis. Broer advised Smith on the AIG acquisition when he was leading the financial institutions group at TD.
“When you think everything is horrible, that’s the time to buy,” Smith said.
With inflation decelerating, the interest rate increases that weighed on the housing market last year may be largely over, and the Bank of Canada may achieve its goal of cooling the economy without tipping it into a recession, Smith said. Still, borrowing costs may need to stay near current levels for an extended period, he said.
As markets increasingly adopt this view, that may mean fewer acquisition opportunities in the immediate future, Smith said. Still, he said, he and Broer remain on the lookout if deals present themselves.
“Maybe things aren’t as soft as we expect,” Broer said. “Maybe opportunities will come out of that.”