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Spin-in: Toronto buyout firm acquired

EdgeStone Capital, one of the largest private equity firms in Canada, has been acquired by a Canadian financial services firm, GMP, which is listed as an income trust on the Toronto Stock Exchange.

EdgeStone Capital Partners, a prominent Canadian private equity firm, has agreed to be acquired by GMP Capital Trust in a deal worth roughly C$155 million.

GMP Capital has three divisions focused on investment banking, institutional clients and private banking.

EdgeStone was founded by Samuel Duboc, a former CIBC Capital Partners executive, in 1999. The firm has reportedly raised more than C$500 million for its third buyout fund. EdgeStone also manages mezzanine and venture capital vehicles. 

EdgeStone currently has more than C$2 billion in capital under management.

Terms of the deal give the institutional services division of GMP – Griffiths McBurney – all the equity in EdgeStone and a “portion of the carried interest entitlements in EdgeStone’s funds”, according to a statement.

EdgeStone will receive C$62 million in cash as well as 4.02 million unites in Griffiths McBurney, which can be converted into shares in GMP. GMP’s stock traded on the Toronto Stock Exchange today near C$35 per share.

All EdgeStone employees will be subject to multi-year contracts and will retain a majority of the carried interest from EdgeStone funds.

In the statement, Duboc said: “This transaction will improve our deal sourcing capabilities by providing us with access to GMP’s extensive network of leading Canadian entrepreneurs. This partnership will provide significant benefits to all of our stakeholders, including, most importantly, the limited partners in our funds and our portfolio companies.”

GMP, led by chief executive officer Kevin Sullivan, was founded in Toronto in 1995 as Griffiths McBurney & Partners. The firm went public in 2003 and converted to an income trust late last year. Canadian income trusts are required to pass the bulk of their income to public shareholders, and as such have been sought-after exit vehicles for private equity firms.

The firm has additional offices in Calgary and Montreal and a representative office in Geneva.