Founders Keep Stakes as Mortgage Leader Goes Private
First National Financial Corp. will soon go private in a $2.9 billion deal. The buyers are Birch Hill Equity Partners and Brookfield Asset Management. Founders Stephen Smith and Moray Tawse will remain shareholders, keeping a minority stake in the company.
Shareholders Offered $48 Per Share
A new company, Regal Bidco Inc., will buy all common shares not owned by the founders. The price is $48 per share in cash, which is a 15% premium over the last 30-day average. It also beats the 52-week high, giving investors strong value.
Smith and Tawse Retain 38% Combined
Smith and Tawse own most of the company today. Smith holds 37.4% and Tawse has 34%. They will sell about two-thirds of their shares. After the deal, each will keep around 19%, giving them a combined 38% stake.
CEO Jason Ellis to Continue Leading
CEO Jason Ellis will stay in his role after the sale. He said:
“This marks an exciting new chapter for First National. With Birch Hill and Brookfield, we can grow faster, invest in innovation, and continue delivering value to our customers, partners, and employees.”
Deal Expected to Close by Late 2025
The transaction should close in the fourth quarter of 2025, once it gets approval from shareholders, regulators, and the court. A special meeting for shareholders will take place in September.
Strategic Review Supported the Decision
The sale followed a strategic review led by independent directors. They worked with advisors to review multiple bids. BMO Capital Markets valued the shares between $44 and $50. It confirmed that the $48 offer is fair for shareholders, except Smith and Tawse.
New Ownership Structure
When the deal closes:
-
Birch Hill and Brookfield will own 62% of First National.
-
The founders and their affiliates will keep 38%.
Preferred Shares and Notes Remain Stable
-
Preferred shares (Series 1 and 2) will stay listed on the Toronto Stock Exchange.
-
Regular dividends will continue until the deal closes.
-
Unsecured notes (Series 3, 4, and 5) will be redeemed, with holders paid the redemption price plus interest.
From IPO to Privatization
First National went public in 2006 at just $2.15 per share (split-adjusted). Since then, including dividends, the company has returned more than 2,100% to investors.
Today, it manages over $155 billion in mortgages. With new private owners, the market will watch how it adapts its broker strategy and invests in technology innovation.
In Summary
The sale of First National gives shareholders strong returns while keeping the founders involved. With backing from Birch Hill and Brookfield, the company is ready to grow and enter a new era in Canada’s mortgage industry.
