TORONTO, ONTARIO -- (Marketwire) -- 02/13/13 -- Equity Financial Holdings Inc. (TSX: EQI), a Canadian financial services company serving the corporate and institutional markets and the retail mortgage market, today announced that it had reached an agreement with TMX Group Limited (TSX: X) to sell its transfer agent and corporate trust business. Equity has made the strategic decision to focus on its rapidly growing retail mortgage lending and deposit-taking business.
"This is a great day for Equity. Over the years we have built a strong and diversified company that has excelled in the transfer agent and corporate trust business and, more recently, entered the mortgage lending and deposit-taking business," said Equity President & CEO, Paul G. Smith. "We have made the strategic decision to move exclusively into the mortgage and deposit business and will now have the necessary capital to invest in and support our new business strategy. At the same time, we see TMX Group as an organization that is well-positioned to support the future growth and continued success of the transfer agent and corporate trust business, which is great news for employees and clients."
Under the terms of the agreement, TMX Group will acquire Equity's transfer agent and corporate trust business for $64 million payable in cash at closing, subject to certain post-closing price adjustments. With 700 transfer agent clients, the business serves companies from its offices in Toronto, Vancouver, Calgary and Montreal. A critical component of the transfer agent and corporate trust business is the highly skilled and experienced management and client service teams, who will be joining TMX Group. The agreement is subject to certain conditions, including Equity shareholder approval, which will be sought at the annual and special meeting of shareholders, planned for late March or early April.
Significant Growth Segment
Having grown significantly since Equity first entered the business in 2011, the mortgage lending and deposit-taking business gained significant strength over the past fiscal year. It represents the Company's fastest growing income stream, with $42 million in new mortgage loans in the fourth quarter alone, for a total of more than $198.0 million in total loans outstanding as at December 31, 2012. As announced at the end of its fourth quarter, Equity's mortgage business is the primary driver of the 260 per cent year-to-date increase in net interest income.
Focusing on Future Growth Opportunities
Nick Kyprianou, CEO of Equity Financial Trust Company added, "Since starting in the mortgage and deposit business, Equity has demonstrated its expertise and superior ability to serve our mortgage broker partners and deposit dealers. This transaction allows us to make the necessary investments to leverage the infrastructure we have developed for continued growth."
Transfer Agent and Trust Clients to Benefit from new Ownership
Mr. Smith noted, "Equity has been a major player in the transfer agency and corporate trust markets in Canada. We are confident that clients will benefit from being part of a larger organization like TMX Group that is not only committed to providing the same level of customer service excellence, but also has the ability to invest in the future growth of the business."
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