Q3 2021 Canaccord Genuity Group Inc Earnings Call
[music].
Okay.
Good morning, ladies and gentlemen, thank you for standing by.
I'd like to welcome everyone to the Canaccord Genuity Group, Inc. Fiscal 2021 third quarter results Conference call.
All lines have been placed on mute to prevent any background noise.
For the speakers remarks, there will be the question and answer session. If he would like to ask a question. During this time simply press Star then the number one non your telephone keypad.
I would like to withdraw your question press the pound for you.
If you have any difficulties hearing the conference. Please press Star then zero for operator assistance at any time.
As a reminder, this conference call is being broadcast live online and recorded.
I would now like to turn the call over to Mr.
For Dan Darrigo, President and CEO. Please go ahead, the stratigraphy Hill.
Thank you operator, and thanks to everyone joining us for today's call as always I'm joined by Don Mcclain, and our Chief Financial Officer, and I'm also joined by David is fond of.
The CEO of our wealth management business in the UK.
Following the overview of our third quarter fiscal 2021 results, Don David and I will be pleased to answer questions from analysts and institutional investors.
During today's call, we'll refer to our earnings release and the M. DNA copies of which have been made available for download on SEDAR and on the Investor Relations section of our website at <unk> Dot com.
Our quarterly Investor presentation, and supplemental financials are also available on our website I won't cover the entire presentation. During this call, but I will refer to certain slides to guide our discussion.
Within our update certain reported information has been adjusted to exclude significant items in order to provide a transparent and comparative view of our operating performance. These adjusted items or non <unk> financial measures. Please refer to our notice regarding forward looking statements the.
<unk> of non <unk> financial measures that appear on page one of our investor presentation and also in our MD&A.
I expect that you've all had the opportunity to review our quarterly disclosures that were made available last night. In addition to the separate press release to disclose the significant investment in our wealth management business in the UK and Crown dependencies. We are very excited about our partnership with HP in both the near and longer.
Term value that this creates for the business and our shareholders.
I'll discuss this exciting development in more detail alongside the results for our wealth management divisions, but first I'll provide a brief overview of our firm wide financial performance.
As you may have assessed by now our third quarter results were very strong most of our businesses in the segments delivered record quarterly results and several of our nine months fiscal year to date results that surpassed our prior fiscal full year records.
Our quarterly financial highlights can be viewed in the context of our historical performance on page nine of our investor presentation.
Firm wide revenue amounted to $533 million, our highest quarterly production on record.
This brings our total revenue for the first nine months of this fiscal year to $1 3 billion, surpassing the record we set in our last fiscal year.
Excluding significant items of firm wide pre tax net income amounted to $111 million, which translated to diluted earnings per share of 62.
For our third fiscal quarter.
This brings our fiscal year to date diluted EPS to $1 16.
81% year over year, given our record revenue and our constant focus on operating our business more efficiently, we continue to generate meaningful margin improvement.
Excluding significant items, our total expense ratio for the nine month period was $4 seven percentage points lower year over year, while our non compensation expenses as the percentage of revenue were nine one percentage is lower than the same period last year.
While a portion of this decrease reflects the reduction in travel and entertainment expenses. We've also proven the agility of our platform, which is capable of supporting a significant increase in revenue levels over a relatively fixed cost base compensation ratio for the third quarter.
<unk> was 61, 7%, but as we previously indicated it has been trending lower from prior quarters.
I'll note that our effective tax rate for the quarter was 31% of sequential increase of two nine percentage points, which primarily reflects the increased profitability earned in our higher tax jurisdictions of the United States and Australia.
Our business continues to be capitalized to support our strategic priorities and deliver enhanced value for our shareholders subs.
Subsequent to the end of the quarter, we disclosed that we are seeking consent to amend the terms of our unsecured senior subordinated debentures, which are set to expire in 2023.
This proposed change is intended to provide added flexibility with respect to the allocation of our capital resources. We have received preliminary support from holders representing over 55% of the outstanding debentures I am also.
Pleased to announce that our board of directors has approved a quarterly common share dividend of $6 five.
Our second increase since the beginning of this fiscal year.
This is a testament to the stable and growing earnings contributions from our wealth management operations to date and we expect further increases in connection with the sustainable improvement that this segment is on track to deliver.
Our business is performing just as it should providing our investors with a stable and growing earnings foundation from our wealth management businesses and with significant upside from our capital markets business during periods of market strength.
Without a doubt the extraordinary market opportunity the benefited small and mid cap industries and investors was an important driver of our revenue and profitability growth in this quarter.
But perhaps most importantly, we continued to capture market share across regions and verticals further enhancing our position as the leading mid market independent investment bank and wealth management firm in each of our key geographies.
Anyone listening to this call, we will likely be well versed in the current market dynamics, but at the end of the day, we are a people business and I continue to be impressed by the relentless dedication from our 'twenty 300 people, who through hard work and dedication have harnessed every.
Unity to create value for our clients through this extraordinary period all of working in a remote environment that we never expected with last this long.
Our global capital markets business is up substantially this year and most notably during our third fiscal quarter for.
Firm wide capital markets revenues amounted to $349 million for the three months period, essentially double the revenue from the same period a year ago.
We earned record quarterly contributions from our U S, Canada and Australian businesses.
Excluding significant items the pretax net income contribution from this segment amounted to $92 $5 million for the third quarter and almost five fold increase over the same period a year ago.
We participated in 187 transactions globally, raising proceeds of $20 billion for growth companies. During the three month period and further solidifying our position as the most active midmarket investment bank dealer globally.
The third quarter also presented an opportunity for us to deliver on a strong pipeline of higher margin the advisory activity, bringing advisory revenue for the three months period to $71 million. Another all time record.
Our revenue mix was broad based with a concentration in any sector or region greater detail can be viewed on page 24 of the investor presentation.
Our U S capital markets business was our largest revenue contributor delivering 46% of firm wide capital markets revenue and the significant year over year gains across all verticals I will point out debt advisory revenues for the third quarter were the highest on record for this team at 51 million.
An increase of 76% year over year.
This drove a significant increase in our adjusted pre tax profit margin for this business, which reached 24% for the third quarter and 17% for fiscal year to date.
We've also been steadily improving pre tax margins in our U S business since we expanded our advisory practice with the Petski prune the <unk> acquisition in 2019.
Excluding significant items, our Canadian capital markets business contributed pretax net income of $42 million.
Amounting to 46% of adjusted pretax net income for our combined capital markets businesses.
Total revenue for the three month period increased by 152% year over year to $121 million.
And this team reported its strongest quarterly investment banking revenue on record at $86 million.
Our Canadian business continues to be of top great domestic underwriter in the region and was the leading equities in the IPO underwriter for the 2020 calendar year.
We have also continued to lead in the Canadian Spak issuance, both of the sponsor and underwriter, providing innovative opportunities for growth companies to access public capital.
This was the third consecutive quarter, where revenue earned by our Australian team exceeded that of the prior full fiscal year.
Third quarter revenue amounted to $46 million, bringing the total for the first nine months of the fiscal year two of $135 million.
An improvement of 358% when compared to the same period of the prior fiscal year.
As with prior reporting periods. We note that revenue in this region includes unrealized gains and certain inventory and warrant positions earned in respect of our investment banking activity.
We always apply of conservative valuation for those investments and we work to monetize them efficiently.
Our UK and Europe operations achieved modest profitability in the third fiscal quarter, primarily driven by year over year increases in investment banking and trading revenue, which increased by 179% and 44% respectively.
The environment in the U K has been challenging across the industry, but I'm also proud to say that this team was the most active aim underwriter for its second consecutive year and continues to show impressive growth in its roster of corporate broking clients.
While our U K and Europe advisory activities remain below historic levels revenue from the segment increased by 24% sequentially during the three month period.
Each of our wealth management businesses delivered excellent results in our third fiscal quarter.
At December 31, total client assets reached a new record of 85 billion.
An improvement of 17% compared to a year ago, and we are seeing continued growth into the current quarter.
Excluding significant items, the three and nine month pretax net income contribution from this segment amounted to $39 million and $90 million improvements of 110% and 42% respectively.
Although the lower interest rate environment continues to negatively impact revenue and profitability associated with our deposit and lending activities I'll note that the adjusted pre tax profit margins in each of our geographies increased over both the three and nine month periods.
For our combined wealth management businesses third quarter adjusted pre tax profit margin increased by seven two percentage points year over year to 21, 7%.
Our North American wealth management business was the largest contributor over the three month period with quarterly revenue of $93 million and an adjusted pretax net income of $20 million increases of 102% and 385% respectively.
Both new records for this business.
The robust environment for new issue activities boosted third quarter investment banking revenue in this business to $37 million.
Bringing the fiscal year to date revenue for this segment to $70 million.
At the end of the third fiscal quarter client assets in this business reached $29 billion.
An increase of 40% compared to a year ago.
The advantages and opportunities provided by our platform had been consistently evidenced in the growth of this business, which has outpaced the broader industry.
This performance has driven increased interest from established IAA teams looking to join <unk>.
Accounting for a seasonal break in activity over the holidays. We are pleased to report commitments from advisors, representing client assets of over $530 million, who will be joining us from both bank owned and independent competitors.
Client assets in our Australia business increased by 13% year over year as CG gains momentum as the Premier brand for small and mid cap investors in the region.
Third quarter revenue contributed by this team increased by 59% year over year to $18 million.
This business has been an increasingly positive contributor of pre tax net income since we welcome to the Patterson team in 2019.
Excluding significant items the adjusted pretax net income for the third fiscal quarter amounted to $3 1 million exceeding the aggregate contribution from all for quarterly reporting periods since patterson's joined the CG platform.
And finally, turning to our business in the U K and Europe, where client assets at the end of the third quarter reached a new record of $51 8 billion.
Under David is fond of leadership. This business has consistently delivered steady growth and profitability through a range of market environments.
Over that period. His team has identified a number of additional opportunities for growth that our own capital allocation objectives have made challenging for us to finance.
For this reason we are very pleased to welcome of significant investment from Hps, which as the partner to help fund the future growth of this business, while creating options and flexibilities for us to deploy the proceeds and ways that will continue to benefit our shareholders.
On the converted basis, the net cash proceeds from the sale of the convertible preferred shares amounts to 219 million Canadian dollars and represents a 22% interest in the UK wealth management business.
We have provided additional disclosures in the press release MD&A and on slide 15 of our Investor presentation.
The proceeds will be distributed to the group to redeploy our capital in ways that optimize value for our shareholders the true.
Transaction has been structured in a manner that attributes of premium valuation for this asset while minimizing dilution for our existing shareholders.
While 78% of the net income contribution from this business will be allocated to the group results going forward. We believe this development gives David and his team greater support to advance their growth and deliver steadily increasing net income contributions to our group results.
Subject to customary regulatory approvals, we expect the complete this transaction within the first quarter of fiscal 2022.
Looking ahead, we are optimistic that each of our wealth management businesses will continue to generate margin improvement over the coming quarters and years and we will continue to invest with discipline and the growth of this segment to further enhance our earnings potential we will be opportunistic yet measured in our approach to cash.
<unk> deployment with a disciplined focus on initiatives that increase the long term value of our business, while upholding our commitment of returning excess capital to our shareholders.
In conclusion, our strong quarter and fiscal year to date results reflects the resilience of our business and the breadth and quality of earnings that we've been able to achieve.
Despite the optimism surrounding the rollout of vaccines the circumstances surrounding COVID-19 continue to be fluid and we're continuing to operate our business and of safe and responsible manner for the protection of our employees and communities.
Heading into our fourth fiscal quarter, we are operating at near record activity levels with strong client asset levels engaged institutional and retail investors and a solid pipeline of ECM and advisory mandates.
We do not expect this level of of momentum to persist throughout calendar 2021, several factors point towards the continuance of our support of marketplace for growth and value stocks in our focus sectors.
With our defensive revenue mix and a relentless drive to be the very best in our core focus areas. We are structured to deliver stability in times of stress and increased value when markets are active and with that Don David and I will be pleased to take your questions. Operator, if you can please open the lines.
Thank you, ladies and gentlemen, we will now conduct the question and answer session.
The last question Press Star then the number one on your telephone keypad. If you would like to withdraw your question press the pound key there will be a brief pause while we compile the Q&A roster.
Your first question comes from Jeff Fenwick of <unk> Securities. Please go ahead.
Hi, good morning, everyone.
Since the then obviously a lot to cover there in a very busy quarter, but why don't we start with your announcement that you were just running through with Hps.
Maybe it's starting to line can you just characterize who they are a little bit for us.
How the involuntary soon this is largely pass of money, although it looks like they've done a little private equity in the past maybe of a more focused on debt debt.
Of that thing so what kind of background can you get us on that EPS relationship and how the play with you going forward here.
I mean.
Thanks. So thanks for the question I mean, <unk> is the old Highbridge.
The change the name.
They have been incredibly active.
Equity investors structured as a craft, but but the line between perhaps debt equities of pretty blurry line.
So they've been very active they were just.
We're just partnered with Apollo and buying great. Canadian they were one of the early financial sponsors just from the Canadian perspective in <unk>. They were of the equity beyond DFL as it grew so very active in this market they've got close to $70 billion in assets.
And the like businesses that are stable and growing and that are consolidating which is exactly the business that the.
David runs so from our perspective, they were a perfect partner structure as of <unk> gives us added governance flexibility.
From from our perspective in terms of continuing to drive the strategy. So I wouldn't classify them as passive money, but obviously in a structured investment we probably got a little bit more flexibility than we would have if somebody was just writing of pure equity check alongside us. So we're very very happy with the investment and then also structured this way with the yield and certainly for.
<unk> a premium valuation for the assets than perhaps you would see if it was just straight common.
Okay, and I know you've aspired to grow the heat occur.
With many of you picked up Hungary, Dalian wanted to expand on that.
The foundation you're out there so.
How should we expect things playing out from here at CME.
The.
Doors, the knock on and conversations that made the year.
The center for a while I mean, how do we think about this playing out here and I guess in the context of the market as well where there has continued the deconsolidation.
While you guys haven't been able to transact sharing.
I'm going to let David answer the back end of the question, but just on the front end because David it'd be hard for David answers I mean in the last for years, we've grown our assets in that business, we've doubled our assets in the business. We've doubled our revenue in our U K wealth business and we've tripled our net income on the Canadian dollars. So certainly tripled our net income in the last five years.
David has flawlessly and he wouldn't say this I will devote himself, but flawlessly executed to continue on that pace of activity in that pace of growth. There is other things we need to do so David maybe you want to speak a little bit too.
How you see the business continuing to progress for the next five years.
Sure. Thanks, Dan just checking that you can hear me can you can you hear me great debt. Thanks.
So really I think.
We've had it from five years I think the challenge for ourselves.
To have another strong of five years as Dan said.
And I wouldn't solely put debt on.
Acquisitive growth I think we are really focused on.
Organic strategy.
I am really building out that organic strategy to make this business.
Even more so than than it has been doing and focusing on our culture and people.
Say that we do have a competitive advantage in.
The system the way that we're set up currently.
Clearly there is an opportunity for inorganic growth, but I would say that the.
This is slightly different.
We now have the supportive partners of health Huff from acquisition.
They are like minded in terms of.
Our culture, our investment process et cetera.
The mature business than we were five years ago. So I think we know what we want a little bit more.
Absolutely windows of opportunities come up.
We'll be we'll be pretty aggressive about it I hope that answers your question.
Thanks, Dave I guess all of it.
I think about this business is one where it's different from from the Canadian market, where you can pick up the advisor teams and pull their assets over so the the organic growth here, where they come from enhanced marketing or is there a solution set that youre missing somewhere that would be complementary value.
And so that's what we're talking about.
Yes.
We really I was late for this call I, just got a very nice debt.
From a senior investment.
<unk>, who came from how retail of I'll just share with you a really really.
Nice story that makes me very proud actually he said David when you met me you said then.
I should get into the Premier League of he was managing the circa 65 million tons of assets now he's managing 120 million tons of asset the net two to three years and that makes me very proud he's got all the tools at his fingertips.
He's got a great team.
And he's got a really good culture and he.
Is taken that opportunities of really this is about the business at providing the right foundation the out in the.
Science to allow the individuals.
To continue to grow that book getting them more efficient and obviously, giving them the right marketing and digital marketing capabilities to really get a name out debt. So they can really maximize that potential going forward and easy to talk about much harder to execute.
Okay. That's that's helpful. Thank you.
So why don't we talk about Canada, then Dan as well in the it's been a great success in gathering assets and some of the profitability growth there as well.
<unk>.
You mentioned you have some commitments for advisors to come over.
I mean, you extend the extent of your success that you've had the financial position of the firm today. The fact, you've got the currency now maybe go out and utilize would you look to do something.
More of like a platform acquisition potentially down the road here in Canada or is the plan to basically stick with that gathered the teams and then plug them into the platform.
Yes, I mean, we definitely want to be larger in the wealth business in Canada. There is a number of strategic directions, we're looking at as well as our historical path of bringing on advisors.
We're really seeing the benefits in Canada of the marriage between our capital markets business, and our wealth business and Youre seeing both businesses grow significantly youre seeing the same in Australia to be honest.
Unlike the U K, it's a different business those two businesses are separate as you know so from a Canadian perspective, I mean, we've seen remarkable 50% uptick in our in our assets.
We're at roughly $30 billion now.
Sorry, 50% uptick in our revenue in the 13% uptick in.
In our assets so and.
Yeah, Theres more advisers coming on board. We also have a very big back office as you are aware of pinnacle offering.
There's a number of different paths, we're exploring for growth clearly, we're very well capitalized right now and I think as you know, Jeff Theres really not a lot of being platform acquisitions out there theres very few in the obviously, we know them all very well.
Okay.
Why don't we talk briefly.
The other side of the answer and capital markets in the not just.
Really strong across the board.
One of the standard sort of advisory in the U S. Obviously really accelerating there nicely advisory had been one of those areas of the disrupted early in Covid. So that's coming back in.
I guess are you seeing that in other markets is one of the questions here I mean, Canada has done well on that front, but are you. How are you feeling about that as maybe an area of that maybe the next leg here the that'll pick up steam.
I mean, the record advisory revenue from just kind of add it up above the firm was driven off the U S, but Canada had a pretty active advisory market to less so in the U K and Australia, it's not one of our strength so it would probably.
Primarily be in North American driven phenomenon.
We've gone.
Again mature for the increased our M&A revenue almost doubled from Q2 the Q3.
We.
We indicated that that was picking up we've got pretty good visibility on M&A just given the pipeline that takes to close the deal and we continue to feel pretty confident about the broader M&A market. We're in.
In a period, where there's good stock prices good liquidity that all points to a positive M&A environment. So we continue to be think of.
Think of it will be strong for the next quarter or two as long as we've got the.
The ability for.
Okay, and then maybe more broadly in terms of capital allocation from here.
So at the senior news on your converts and what Youre trying to do there.
Thinking about obviously now for the expansion in the U K I mean, what are sort of the priorities for using some of that capital that you're building.
Often get these points in the cycle of the things are so strong. So is there other some other things on your list here that youre thinking of maybe using that capital for how do we think about that yeah, Jeff I think I'll be a little of elusive at this stage.
Just just given what's going on but but bear in mind that the our UK transaction doesn't close for a couple of months. So its not like the money burning a hole in our pocket right now so we've got some time to think through it and understand what our.
You know what our alternatives are in the context of the market at the time and then we will.
We have further guidance on the on the next quarter call in terms of what we're doing.
And the better clearly the the change in the convergence youre, making that sort of the one of the front and center of things here Youre looking to the go forward with it was simply the create that alternative it's our option.
If the converts.
Approve the change, which I suspect will happen. It just creates an option for us otherwise we couldn't have taken out those converts that were impossible to take out.
This change so it provides it's not like we're taking out of the Super Duper price, we're taking them out of that market. That's the way of the amendment is kind of defined and change so but it does create an alternative for us should we choose to do that.
Okay. Thanks for the color I'll requeue.
Thank you so much and thanks for the great questions.
Your next question comes from Graham Ryding of TD Securities. Please go ahead.
Thanks, Graham and good morning.
One of them.
Maybe just keeping on the theme of the converts.
What do you need in terms of.
The industrial support I think you said 55 per se.
To get over too.
For that amendment to the pass through.
No we have 55% of the outstanding convert holders that have already agreed to that amendment. The already agreed to vote in favor of that amendment, we have to get the two thirds of those voting.
Two thirds of it and then.
If that goes through the situations, where you book of charge again here over the last time the amended the converts there was a bit of a one time.
Yes, the charge I think here will that happen again.
Good question, Don do you want to answer that.
Don can hear you you're on mute.
Okay.
Alright.
Yes, there will be an accounting charge.
At the time.
That would become effective at the time the of the debenture holders meeting and then that would vary over time and.
And the true up at the time we.
Purchased the debentures, if we do if we do actually complete the purchase.
Part of the charge would go through directly to equity and part of it will go through P&L.
We would treat it as of as an adjustable items similar to the charge in 2018 for fiscal 2019.
Okay understood.
<unk>.
Yes.
On the advisory side of the business, obviously very strong in the U S debt.
Let's assume that that's a direct reflection of the petski per in the acquisition and of those type of deals that were driving the right yes.
This quarter, yes.
Yes, I mean, the the line is becoming increasingly blurred between what was petski prudent and what was Canaccord genuity as you would expect.
Two years post the acquisition so.
It's probably hard to define that Graham exactly but.
We do have increased M&A specialization in our core focused areas of technology and in healthcare so.
We spend a lot of time of the private equity folks in the U S. So there is a obviously a very active stable.
M&A transactions that are kind of progressing through the pipeline.
I'd add to that debt, we probably our average fee per M&A deal has probably gone up in other words the size of transaction. We're doing has probably gone up so.
That's an added benefit youll see in our M&A revenue. So yes. So we're clearly in the advisory business in a material way in the U S. As we are in Canada, and hopefully that will continue to expand.
Got it.
How about a little bit of this color in calendar Q1 here in terms of activity.
Florida.
As a persistent you just look at the league tables. So you can figure it out.
It's been an incredibly volume in January I mean, I think anyone who is kind of looking at the capital markets can see from of trading perspective of immense amount of volatility in the market that helps us obviously.
We've seen an incredible amount of underwriting activity in the first month of the quarter.
So yeah I mean.
I'm reluctant to be too bullish simply because.
Things can change and things can change very quickly I think long term with the liquidity, we see it in the market even with short term pullbacks, we expect the market the <unk>.
The recover materially not forever, but for the time being for the foreseeable future. So.
Really hard to predict beyond a couple of weeks on the new issue business, Graeme but right now as you can see yourself I mean, there is an immense amount of activity theres companies Destocking, there's tons of equity underwriting going on in all of our markets right now, but I don't know if thats going to continue from now to the end of March.
Our M&A pipeline continues to be robust though.
Some of your comments.
Relative to all of your regions U S Australia.
Yes, I mean, Australia typically this would be a quieter quarter in Australia. It's the summer of the middle of summer in Australia, and it's their holiday break so just like Canada, sometimes slows down in the summer Australia would slow down some kind of in the winter, but yeah broadly speaking that comment applies to all of our markets. Okay.
I guess my last question just on the compensation side, so the ratio was down quarter over quarter.
It was good to see but yeah. It.
It does sound like there was still some.
Share based compensation was elevated due to the share price is there any of the quantified as to how much of the impact that had on maybe the compensation ratio of the quota.
Okay.
Yes, I think it certainly did have an impact on the compensation ratio over the quarter as we had sort of indicated at the start of this fiscal year.
<unk>.
We said that it would share.
Share price and sort of continued as they were the start of the year then.
It would have an elevated impact during the course of the year, but we would have expected at the sort of decline as we progressed through the year.
<unk>.
And that was that's continued to hold true and that's what we've seen.
It's difficult to quantify.
<unk> exactly what the impact would be but I think.
We had always said debt, the 60% plus or minus of bit was our sort of normal course comp ratio and I think that still holds true so to the extent we're above that I think you can sort of.
Assume that that sort of driven by.
Stock based type charges that are going to be impacted by the level of stock price.
Okay.
That's it for the.
Thanks drew.
Your next question comes from Rob Goff of Echelon. Please go ahead.
Thank you very much and zone pay for them to say congratulations both on your results and your new partnership.
Very impressive at least for.
Thanks, Rob.
Yes.
We've pretty much gone around the globe, but maybe can we focus a bit on Australia.
Talk to how you see the market unfolding.
What the growth prospects you see within Patterson.
The M&A advisory business has been exceptional in the U S. You did make mention to that.
With respect to Australia is that an area of growth of our investments you might see in Australia.
Yes.
Our Australia business has obviously performed dramatically higher than what our expectations were.
As I mentioned are in.
In our capital market side of the business our revenue in each of the past three quarters was higher than what it was in all of last year.
So in the immensely profitable great business for Us and remember we increased our ownership in that business from 50% to 80% I don't know a year and a half ago two years ago. So the timing timing worked.
Obviously, very very well from our perspective.
And the partners there are very very excited so.
It continues to be a very good market. Some of it is just obviously a strong mining tape and the strong technology take no different than what happened in other markets, but a big part of it is our improved competitive position in the marketplace in part because we've been there for a while and we're getting better and better and in part because we've been married it with a very successful.
Our wealth business and the wealth business there.
Again, I mean, we did $3 million in pre tax net income this quarter in our wealth business in Australia, that's a business that we bought for $27 million a.
The year and a half ago. So obviously that's performing.
Higher than what we expected it to perform so when you when you marry the two businesses, we have collectively done remarkably well in that marketplace and continue to be very very excited by the prospects there that being said.
It is the small mid cap market and win when that tape stops for small and mid cap stocks.
You can't expect that level of activity, we do as you know take care of lot of our <unk>.
Fees, there and options in the broker warrants it wasn't a significant element of the revenue. This quarter. There was some of it but 10% of it but but it's always there and I can always create some volatility in our overall results. So our Australia business continues to perform well, we're looking at committing more capital to Australia.
<unk>.
We've hired some advisors in Australia were trying as we've indicated before we are trying to replicate our strategy that we deployed in Canada on our wealth side in Australia, that's starting to work and you can see that kind of working in our in our numbers I mean assets are up.
From almost doubled from when when when we bought that business and revenue is significantly up in our wealth business and significantly up in our capital markets business. So we're.
Very excited by the prospect, Venezuela integrated into the broader firm at this stage as well.
The event.
The.
The pipeline of.
Wealth advisors, both in Australia, and in Canada can you talk to what Youre seeing in terms of the terms of getting those advisers on for are there any upwards or downwards for pressures on those valuations of upfront loading fees.
Stuart wrap this isn't on the call with US are Canadian head of wealth in our in our <unk>, but if you ask them. The question. He would tell you prices are coming down.
That being said.
We've hired I think 46 teams of advisers in Canada believe it or not I'm not sure. It's not enough data points to actually look at that graph and say oil prices are definitely coming down because each advisor isn't different level of profitability in the relatively more of less important but it's not let's put it this way, it's not going up that that I'm pretty sure.
And I take it with COVID-19, becoming a bit more of the norm.
For our more comfortable with that and we're comfortable in making these moves that's helping your efforts.
I'd say, it's still delayed them a little bit to be honest.
I think in the non Covid the world, we'd probably see a more active recruiting pipeline, but yes, we're able to get through those COVID-19 issues. We've brought over many advisors, who we haven't really met with them until they show up of lots of zoom calls and all of that kind of stuff, but yes.
The advisors are still moving even though it's COVID-19.
Okay and just.
General term any true.
Tens of shifting in your.
M&A pipeline, our underwriting pipeline between the three leaders being Tech life Sciences in line money.
No.
[laughter].
Right.
No I don't think so it's it's.
It's wherever the.
No there so but it's wherever the risk capital is going so at one point were the dominant underwriter in cannabis and we're the dominant underwriter of in mining and then we're the dominant company taken Tech Tech companies public and then it's kind of wherever that risk trade goes I think it's more about us being very very active in the and the risk Ella.
<unk> of the marketplace and wherever that goes we tend to try and be there in a pretty dominant way. So we haven't seen them.
Much changing sectorial I think it'd be hard for me to have a broad brush approach on that.
That's great. Thank you very much the congrats.
So much for the comments and questions.
Your next question comes from God flat of Sky Capital. Please go ahead.
Gentlemen, thank you for.