First National Financial Corp. is set to be acquired by private equity heavyweights Birch Hill Equity Partners and Brookfield Asset Management in a $2.9-billion deal that will see its founders retain a minority stake in the company.
The agreement will take First National private through a newly formed entity, Regal Bidco Inc., which will purchase all outstanding common shares—excluding those retained by founders Stephen Smith and Moray Tawse—for $48 per share in cash. That represents a 15% premium over the company’s 30-day volume-weighted average and surpasses its 52-week high.
Following the close of the deal, Smith and Tawse will each hold an approximate 19% indirect ownership in the company, having agreed to sell about two-thirds of their respective stakes, which currently account for 37.4% and 34% of outstanding shares.
“This transaction represents the start of an exciting new chapter for First National,” said Jason Ellis, the company’s CEO, who will remain in his role. “Birch Hill and Brookfield bring significant expertise in the Canadian financial services industry, and we are excited to partner with them to grow our platform, drive innovation, and deliver for our customers, employees and institutional partners.”
The transaction is expected to close in the fourth quarter of 2025, pending shareholder, court and regulatory approvals.
Strategic review leads to sale
First National said the agreement followed a “robust strategic review process” led by a special committee of independent directors and advisors. Multiple bids were considered, with the chosen offer deemed the most favourable to shareholders.
BMO Capital Markets, acting as independent valuator and financial advisor to the special committee, determined the fair market value of the shares to be between $44 and $50. The firm also concluded the $48 offer to shareholders—excluding Smith and Tawse—was financially fair.
Upon closing, Birch Hill and Brookfield will hold approximately 62% of First National’s equity, with the remaining 38% shared between Smith, Tawse and their affiliates.
Preferred shares and notes unaffected
The company’s preferred shares (Series 1 and Series 2) will remain listed on the Toronto Stock Exchange and continue trading post-closing. Similarly, First National will continue to pay its regular dividends until the transaction closes.
However, its outstanding unsecured notes—Series 3, 4 and 5—will be redeemed at that time, with holders receiving the applicable redemption price plus accrued interest.
From IPO to privatization
First National went public in 2006 at $2.15 a share (split-adjusted). Including dividends, the purchase price implies a total shareholder return of more than 2,100% since its IPO, the company said.
With more than $155 billion in mortgages under administration, First National is one of Canada’s largest non-bank lenders. The company has maintained strong broker relationships, and industry watchers will be following closely how the new ownership structure affects its broker strategy and platform innovation.
Shareholders are expected to vote on the deal at a special meeting in September. If approved, the company’s common shares will be delisted from the TSX.
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Last modified: July 28, 2025
