The Toronto-Dominion Bank confirmed Tuesday morning that it has agreed to buy Cowen Inc. in its latest U.S. takeover.
Under the terms of the deal, TD will pay US$1.3 billion, or US$39 per share, in cash to buy the New York-based investment bank. TD said it sold 28.4 million shares in The Charles Schwab Corp. to finance the transaction; as a result, TD said the deal will be neutral to its Common Equity Tier 1 capital ratio.
“Cowen is a leading independent dealer with a premier U.S. equities business and a strong, diversified investment bank that, when combined with TD Securities, will allow us to accelerate our strategic U.S. growth plans,” said TD President and Chief Executive Officer Bharat Masrani in a release.
The deal has been a source of speculation for weeks, after Bloomberg News reported in early July that talks were underway. The Wall Street Journal reported late Monday that a deal for more than US$1 billion could be announced as early as today.
Paul Harris, a partner and portfolio manager at Toronto-based Harris Douglas Asset Management, said the scale of TD’s investment banking ambitions in the U.S. will go a long way in determining the success of the Cowen deal.
“Is this really a deal to help their existing client base grow and help them with investment banking, and corporate finance, etcetera? Is that the goal? Or is the goal to say we want to be a big investment bank in the United States? And I think if that’s the case, I think that’ll be very difficult. … And so if you’re going to compete with Goldman (Sachs), I think this would be a very bad thing, or with Morgan Stanley or JP Morgan.”
Harris, whose firm owns shares in TD, added the Cowen deal would probably “look terrible” in a few years if TD has any intent of trying to compete with those Wall Street giants.
TD said the purchase of Cowen will “modestly” boost its fiscal 2023 adjusted earnings per share, and that it’s expecting up to US$450 million in pre-tax integration and retention costs over a three-year period. The transaction, which TD said is expected to close in the first quarter of next year, is subject to regulatory approvals in Canada and the United States, as well as a vote by Cowen shareholders.
“The reality is that by selling down its Schwab stake, [TD] is simply trading some U.S. wealth exposure for U.S. capital market exposure. The diversification inherent in that trade is not necessarily a bad thing, although we note that the market generally prefers wealth to capital markets especially coming off of a historic M&A cycle. On top of that, the track record of successful cross-border capital markets acquisitions is small, with retention of people being the key obstacle over the medium to long term,” wrote Meny Grauman, an analyst at Scotia Capital, in a note to clients.
Cowen is the second major U.S. takeover that TD has revealed this year. In February, the Canadian bank announced it agreed to buy Memphis-based First Horizon Corp. for US$13.4 billion. That deal is still awaiting final regulatory approvals.
NorZinc agrees sale to investment fund with Dehcho mine in doubt – Cabin Radio
NorZinc, the company trying to develop the Dehcho’s Prairie Creek Mine, has agreed to sell itself to a private investment fund as its debts mount.
In a news release on Friday, NorZinc said it had no reasonable alternative. The buyer, RCF VI CAD, is a Delaware-registered branch of Resource Capital Funds, which already held 48 percent of NorZinc’s shares.
The sale agreement, which must be ratified by shareholders in the coming months, comes as RCF provides NorZinc with an additional US$11 million loan “to address the company’s near-term liquidity needs.”
RCF is offering NorZinc shareholders $0.0325 cash per share, a slight premium on the 45-day average of $0.0314. On Friday afternoon, shares were trading at $0.035 each on the Toronto Stock Exchange.
The fate of the Prairie Creek Mine is unclear.
NorZinc bills the mine, on a parcel of land entirely surrounded by the Nahanni National Park Reserve, as “Canada’s next high-grade zinc, silver and lead mine.”
But finding anyone with the money to get the mine built has been difficult.
In theory, the mine could be operational by 2025. Regulatory permits for a mine to be constructed were received earlier this year and a winter road to the mine site has been in development.
On Friday, however, NorZinc said it had debts of more than $6 million, was at “material risk” of defaulting on that debt without a sale to RCF, and had “explored all viable strategic alternatives” to a sale without success.
The news release made plain that Prairie Creek is by no means certain to go into production, despite president and chief executive Rohan Hazelton’s statement on Friday that he and the company “remain bullish on the long-term viability of the project and the positive impact it will have on the local region.”
Several paragraphs later, the news release stated: “The company requires significant funding to advance its Prairie Creek project – particularly at this crucial point, as major work on site and access development is in progress.
“The company currently has limited cash and negative working capital to fund the necessary capital projects … has been seeking funding to support its long-term business plan since early 2021, and has been unsuccessful to date.
“It will be several years before the Prairie Creek project reaches commercial production, if at all.”
NorZinc has tried to drum up interest in Prairie Creek by pointing to zinc’s addition to Canada’s critical minerals list – a list of minerals “considered critical for the sustainable economic success of Canada and our allies,” according to the federal government.
But the company has faced trouble building its winter road and has not always enjoyed healthy relations with nearby First Nations.
In a letter to regulators earlier this summer, Fort Liard’s Acho Dene Koe First Nation highlighted the proposed mine’s potential impacts, such as increased heavy traffic and metals runoff.
“Our position is that our concerns have not been heard, have not been considered, and have not been accommodated,” the First Nation wrote.
“We look at how this project has been proposed and can’t help but feel there are better alternatives to the successful construction and operation of the Prairie Creek Mine.”
The Nahɂą Dehé Dene Band, in Nahanni Butte, stressed in a letter of its own that the mine site and proposed access road are entirely within its traditional territory.
Elder Jim Bedsaka said that while the community of Nahanni Butte supports the mine, the community had been “getting a lot of interference” from other communities claiming rights.
“We should be the one who approves it.” he said at the time. “There are so many little concerns outside of the community slowing down the project. We have money now. Let’s, if we can, approve it.”
The company, it transpires, did not have enough money to keep going without outside intervention.
“While we believe this asset has an exciting future, given the current capital markets, debt and equity position of the company, we believe this is the best alternative for the company and its shareholders at the present time,” Hazelton said of the proposed sale on Friday.
“We are proud of the recent milestones achieved in permitting and Indigenous community agreements that have advanced Prairie Creek development.”
Three Rules For Successful Bear Market Investing – Forbes
The markets are ugly: through the first three quarters of 2022, the S&P 500 is down nearly 24%, and the bond market, usually a safe haven when stocks are dropping, has shed 13%. Plus, the US economy seems destined for recession (we might be in one already), inflation continues to be stubbornly persistent, and Russia’s invasion of Ukraine, in addition to being a humanitarian tragedy, is causing dire economic effects.
All this bad news and accompanying market volatility increases our fears of uncertainty making us feel anxious and stressed. It’s not fun. Yet, investors aren’t powerless in the face of uncertainty; we can control our behavior. Below are three rules to help weather the bear market (defined as a market decline of 20% or more) and have better investing practices.
Rule #1: Adopt a Big Picture Perspective
I vividly remember New Year’s Eve 2019 because I was on a ski vacation and attended a party at a beautiful condo in Vail, Colorado. At the party, I struck up a conversation with a college student interested in investing who, once realizing what I do for a living, asked what I thought the stock market would do in 2020. My answer was that it would probably be up, but it might also be down (that’s my prediction every year, which you can access here: 2020, 2021, 2022). The student thought my answer was hilarious (probably helped along by beer), and our conversation moved on to other topics.
I think about that conversation a lot. What if on that New Year’s Eve I had a crystal ball and knew that a pandemic was about to sweep across the globe, killing tens of millions, shutting down vast swaths of the economy, and creating supply chain disruptions that would last years? What if I knew that Russia would attack Ukraine, that inflation would spike to over 9%, and that the Federal Reserve would increase the Fed Funds Rate by 3% within six months? If I had known all that in advance, what would my prediction for the stock market have been? It probably wouldn’t be that even after a 24% decline in the first three quarters of 2022, the S&P 500 would still be up 16% compared to December 31, 2019! You read that right. Even with everything that has happened in the past (almost) three years, the market is up 16% (dividends reinvested). And the market is up 41% compared to December 31, 2018, and 164% since December 31, 2009. The lesson to draw is that even if you knew advance about what would happen in the economy, it wouldn’t tell you what the stock market will do.
Whenever you feel anxious about your investments, reflect on how well you’ve done over the past five, ten, 20, and 30 years. As I advised in a recent article, don’t focus on the high watermark of your portfolio. Instead, pull back and adopt a long-term perspective.
Rule #2: Don’t Look at Your Portfolio
Successful investing requires adopting a long-term perspective, but frequently checking your portfolio, especially when it’s down, makes that challenging; it’s like trying to see something in the distance while wearing reading glasses. Seeing the value of your investments drop can make it feel like you are under attack, making it seem like you need to take action. Yet making portfolio changes in response to emotions is not a best practice; numerous studies have found that trading activity leads to lower returns.
My advice? If you work with a financial advisor, let them monitor your portfolio and advise when you should take action. If you manage your own investments, only look at your portfolio at regular intervals, such as quarterly or semi-annually.
Rule #3: Just Keep Buying
Now is a better time to put money to work in the market than a year ago because prices are lower. Lower stock prices are welcome news if you are a long-term investor and plan on adding to your portfolio. Because market bottoms and tops cannot be called accurately, the best strategy is to keep buying as the market gyrates. Invest as the market declines and invest as it rebounds. It’s a simple concept but not so easy to execute when it feels like the worst is yet to come. Plus, the stock market often rebounds while economic news is dire, so don’t let bad financial news keep you from investing. History has shown that when markets are volatile, the best course of action is almost always to ignore both the markets and our portfolios.
An effective way to overcome emotion is to set up your accounts, so money is automatically invested (like how 401[k] plans work).
Unfortunately, suffering through bear markets is the cost of being an investor. You can’t reap the benefits of investing without paying the cost. For years, investors have worried that the stock market’s strong returns and high valuations aren’t sustainable and that a bear market must be looming. Now the bear is here. Take a deep breath, broaden your perspective, don’t look at your portfolio, and keep putting money into the market.
Targeted policies needed to boost investment in climate change fight – UNCTAD
Attracting international private investment is crucial to closing financing gaps to better respond to countries’ specific needs in climate adaptation and mitigation.
© Shutterstock/Michel luiz de Freitas | Policies to curb climate change through foreign direct investment have focused primarily on the renewable energy and electricity sectors.
Ahead of the next UN climate change conference (COP27), UNCTAD has underscored the growing urgency of shoring up investment to combat the existential threat facing humanity.
A special edition of UNCTAD’s Investment Policy Monitor released on 29 September calls for effective measures to mobilize private sector investment and foreign direct investment (FDI) in key sectors related to climate mitigation and adaptation.
“Innovative ways and means are needed to foster public and private partnerships, improve the enabling policy frameworks and build capacity for preparing pipelines of bankable and impactful projects in developing countries,” the report says.
Previous estimates indicate that annual climate adaptation costs in developing countries could reach $300 billion in 2030 and, if mitigation targets are breached, as much as $500 billion by 2050.
All climate measures need equal policy attention
The report analyses investment policy trends related to climate change sectors between January 2010 and June 2022, during which 103 policy measures were adopted worldwide.
It finds that policy initiatives to promote climate change mitigation and adaptation through FDI focused primarily on the renewable energy and electricity sectors, which account for 60% of the total measures.
Although renewables play a key role in the transition to a low-carbon global economy, the report emphasizes that other mitigation policies – such as energy and resource efficiency technologies and other environmental technologies – also need to be promoted.
“Moreover, climate change adaptation-related sectors need to be defined on a country basis as vulnerabilities and priorities differ nationally and locally,” the reported says.
Varying concerns among countries
The report highlights differing concerns between developing and developed economies.
In the developing world, 30% of the investment policy measures related to climate change sectors aimed to liberalize water and electricity sectors, mostly through the unbundling of the energy market or the privatization of state-owned enterprises.
An additional 43% of the measures sought to promote investments in those sectors through incentives and investment facilitation – such as incentive schemes aimed at reducing the carbon footprint of the energy sector and that of industrial and agricultural production.
Overall, developing economies adopted investment incentives to attract FDI primarily in renewable energy (42%), environmental technologies and green industries (37%) and electricity and water (21%) sectors.
Tighter FDI access to developed economies
The report shows that in developed countries, three out of four policy measures had to do with introducing or widening FDI screening mechanisms, confirming the trend towards heightened national security concerns observed by UNCTAD in recent years.
“The global environment for international investment changed dramatically as a result of the war in Ukraine, which occurred while the world was still recovering from the impact of the [COVID-19] pandemic,” the report says.
“This trend is likely to continue in light of the energy security concerns raised by the war in Ukraine and its impact on energy supply and prices,” it notes.
Tackling climate investment challenges
The report shines a light on the challenges of channeling mitigation investment into developing countries and upscaling adaptation investment through viable business models.
It advocates for strategies that comprehensively address energy issues such as security of supply, efficiency, affordability and environmental sustainability, while addressing the development of climate change mitigation and adaptation sectors and technologies.
“Climate change strategies should embed investment promotion as a key component and communicate the government’s priorities in the medium and long run,” the report says.
“In parallel, the targets arising from the comprehensive climate change strategy should be embedded in investment promotion strategies to inform the activities of the actors involved.”
To increase investment in climate change mitigation and adaptation key sectors, countries need to consider new instruments and targeted policies to attract low-carbon investment.
The report recommends that countries consider providing political-risk insurance to de-risk climate FDI, adopting climate impact assessments when reviewing investment projects and developing facilitation services that specifically target climate FDI.
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