- Posted by Flexiti Financial
- On September 12, 2014
Barry Critchley | Financial Post
Next month, Wellspring Financial, a one-year old Canadian sales financing company, is expected to have completed a $5-million preferred share financing.
While that transaction is small, it’s noteworthy because it represents another financing by one of the country’s more unusual exempt market dealers, Wildlaw Capital Markets.
The dealer, which has been around since 2009 is majority-owned by Wildeboer Dellelce, a Toronto-headquartered two-decade old law firm. It’s understood Wildeboer Dellelce, whose business is focused on capital markets transactions, is the country’s only law firm that has an EMD as part of its portfolio.
“For years we have been providing these sorts of services without doing it efficiently or effectively,” said Dellelce, the EMD’s executive chairman, when explaining the motivation behind its formation. “We had such great deal flow in this area that it made sense to hire professionals to manage it and do it correctly. And you have to be properly licenced,” added Dellelce, also the law firm’s managing partner.
Wellspring’s financing is the first deal under the aegis of Tyler Lang, the EMD’s recently hired senior managing director. Lang joined after 16 years at HDL Capital, another EMD wound up over the summer.
As to why join an EMD associated with a law firm and not a more traditional investment banking firm, Lang mentioned “deal flow. The amount of deal flow you get from a 90 person law firm a couple of floors up is amazing,” he said.
But Wildlaw Capital has clients other than those whom it services from the law firm. And given the law firm’s focus on transactions, Dellelce said “we do not compete with our investment banking clients. We refer to the investment banks.”
Aside from being “a good fit,” Lang said an EMD allows for a “a broader set of transactions. There is more opportunity to find a client and work with them over five years. The idea is to do multiple transactions. In my opinion you can’t get as much loyalty from the clients as to when you are in a smaller shop.”
In his new role, Lang will focus on raising debt and equity for private companies as well as facilitating mergers and acquisitions “largely for later stage companies with a technology focus.”
The sources of capital range from institutional debt providers to family offices (which traditionally supply the equity. Lang said accredited investors now play a lesser important equity-providing role.) Apart from raising $5-million of preferred equity for Wellspring, Wildlaw Capital has raised $4-million of common equity and $15-million of debt.)
One area of the EMD’s focus could be doing a reverse transaction with a publicly listed shell for a private company. As part of that transaction – which will see the private company end up as a public entity – Wildlaw Capital could also raise equity capital for the private company.
At times Wildlaw Capital will work with some of the smaller IIROC or OSC registered investment-banking firms. “There is a lot of collaboration,” said Lang.
The EMD also operates a CFO-to-go service whereby two of its staffers, Paul Van Damme and Artur Agivaev, are available for assignment to those companies that don’t have the resources for a full-time executive.