PI Financial and Echelon Unite In “Merger of Equals”

Vancouver-based investment dealer PI Financial and Toronto-based wealth management firm Echelon Wealth Partners have announced a “merger-of-equals” that will bring the two firms’ operations together in a single Canadian entity. The resulting company will become, “the second largest amongst Canadian non-bank capital markets firms,” according to a press release issued about the merger Tuesday.

The amalgamation of the two retail-securities-focused organizations will become official April 1st, pending anticipated regulatory approval. PI Financial and Echelon expect to fully merge their operations by early 2024.

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PI Financial and Echelon, which acquired Dundee-Goodman Private Wealth in 2016, are two of few remaining small broker dealers who have been out-moded by a landscape that is now dominated by big discount trading platforms, and bespoke wealth management products being sold directly through consumer banks, who have a distinct point-of-contact advantage among their consumer banking and mortgage clients.

The announcement puts the size of the new firm’s client assets at $12 billion, a tiny fraction of the assets under management claimed by their chartered bank competitors. The Royal Bank, for example, listed $1.05 trillion in client assets under management, and Scotiabank claimed $322 billion in AUM at the end of January 2023.

Echelon projects as a modern, consumer-focused brand, complete with a blog, podcasts, and an Instagram feed.
PI FInancial is considerably more guarded, publishing research that is only available to clients.

Echelon-PI-Financial’s access to new listings and private placements will likely continue to be the draw for clients of the newly formed boutique firm.

The post-merger company will be owned by two much larger investment management outfits whose services are not available to retail depositors.

Newly Merged Financial Firm to be owned by the Financial Firms that presently own the Financial Firms Being Merged

Peerage Capital, principal shareholder in Echelon, holds interests in numerous and varied real estate operations, and two other securities-focused investment advisories.

RCM Capital, principal shareholder of PI Financial, acquired its interest in the firm from its prior owner, the Ng Group of Companies, in July of 2020 for undisclosed terms, along with partner HIG Capital. Ng Group principal Gary Ng is currently facing fraud charges in Ontario for having borrowed the money he used to buy PI, using doctored securities statements as collateral.

RCM and HIG were the two firms allegedly defrauded by Ng, to whom they loaned a total of $100 million against invented and altered securities positions. The Globe and Mail reports that H.I.G. will be selling its interest in PI Financial to RCM as part of the transaction.

RCM’s website describes various types of advisory services offered by the firm, which is known to act as a lender to lenders, including an opportunistic deal to extend more than $120 million in liquidity to Bridging Finance in September of 2020, as it struggled to meet redemptions. The deal gave RCM a lien on $1.14 billion worth of loans made by Bridging, and produced around $880,000 per month in interest and fees for the firm by the time it was repaid by Bridging’s receiver in June of 2021.

Information for this briefing was found via Sedar and the sources mentioned. Apart from being a client of PI Financial, the author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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