Canada's Edgecrest Capital buys rival boutique firm Stonecap

TORONTO Mon Jan 27, 2014 3:24pm EST

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TORONTO Jan 27 (Reuters) - Canadian boutique investment dealer Edgecrest Capital Holdings has bought rival Stonecap Securities, Edgecrest said on Monday, in a deal that will add client accounts and speed Edgecrest's expansion into the United States.

Edgecrest, which was founded last year by investment banker David Beatty, did not disclose the price of the acquisition, but said the firm would add 10 employees in the deal.

The purchase comes as several Canadian independent dealers have been forced to consolidate as they cope with higher regulatory costs, tougher competition from larger bank-owned dealers, and a slowdown in resource deals that are traditionally the lifeblood of the Canadian market.

"Given the struggles that we've seen in the boutique environment over the last little while, it certainty poses opportunities for a new firm that's structured properly from the get-go," Sinclair MacDonald, Edgecrest's head of sales and trading, said in an interview.

He said the deal, which includes Stonecap's U.S. operations, will allow Edgecrest to push into that market without a lengthy regulatory process. Edgecrest will also be able to access tax losses accumulated by Stonecap.

"It does expedite our plans for the U.S. market," he said. (Reporting by Cameron French; Editing by Meredith Mazzilli)

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