Financial institution First National undergoes $2.9 billion takeover by Birch Hill and Brookfield
In a significant move for the Canadian financial services sector, First National Financial Corporation, the country's largest non-bank mortgage originator, has been agreed to be acquired by an acquisition vehicle controlled by Birch Hill Equity Partners and Brookfield Asset Management for approximately $2.9 billion.
The transaction, expected to close in Q4 2025, pending approvals, represents a premium of 22.8% over the 90-trading day volume-weighted average share price. The acquisition price is $48.00 per share in cash.
The partnership between First National and Birch Hill/Brookfield aims to grow the platform, drive innovation in the financial services sector, and deliver benefits for First National's customers, employees, and institutional partners.
Jason Ellis, CEO of First National, expressed his excitement about the acquisition, stating, "This is a tremendous opportunity for First National to accelerate our growth and build on our leadership position in the Canadian mortgage industry."
Founders Stephen Smith and Moray Tawse will sell two-thirds of their shares for cash and exchange the remaining third for an indirect 19% ownership each in First National post-acquisition.
Birch Hill Equity Partners, a Canadian mid-market private equity firm based in Toronto, managing over C$6 billion in capital, and Brookfield Asset Management, a global alternative asset manager with over US$1 trillion in assets under management, bring significant expertise to the table.
Birch Hill is known for using data analytics to optimize underwriting and servicing operations in financial services and other sectors, while Brookfield focuses on long-term value creation through investments in real assets and essential service businesses that form the backbone of the global economy.
The strategic focus of the partnership is on leveraging operational transformation and capital-efficient growth by enhancing profitability, expanding into alternative lending such as Mortgage Investment Entities, and exploring cross-border opportunities in the U.S. market. Birch Hill brings expertise in operational data-driven improvements, while Brookfield contributes its experience in infrastructure-like, long-term investments.
This partnership underscores their significant expertise and growing influence in the Canadian financial services industry, especially in the mortgage sector, which is experiencing structural shifts due to changing borrower behavior and macroeconomic pressures.
Upon completion of the acquisition, Birch Hill and Brookfield will collectively hold about 62% of First National. Jason Ellis will continue as CEO of First National post-acquisition. The transaction is subject to customary closing conditions, including regulatory approvals and the approval of First National's shareholders.
[1] Birch Hill Equity Partners [2] Brookfield Asset Management [3] First National Financial Corporation
The acquisition of First National Financial Corporation, a key player in the Canadian financial services sector, by Birch Hill Equity Partners and Brookfield Asset Management will not only boost business growth but also drive innovation in the sector. With Birch Hill's expertise in data-driven improvements and Brookfield's focus on long-term investments, the partnership aims to enhance profitability, expand into alternative lending, and explore cross-border opportunities in the U.S. market.
