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National Bank analyst sees opportunity in Wek’s new merchant bank

Written on February 18th, 2014

Financial Post – February 18, 2014
A newly formed merchant bank run by Mike Wekerle, the former star trader and a co-founder of Griffiths McBurney & Partners, has won a rave from analysts at National Bank Financial.

National Bank initiated coverage of Mr. Wekerle’s Difference Capital Financial Inc. on Monday with an “outperform” rating, suggesting that shares of the publicly traded firm could rise to $3.40 from $2.22 in the next 12 months.

While the shares are given a “speculative” risk rating, National Bank analyst Kris Thompson says Difference Capital provides a “rare opportunity to invest in growth stories that you can’t make through your broker or through most institutional investment funds.”

Difference Capital was formed in March of 2012 by the reverse takeover of TriNorth Capital, a publicly traded shell company. It has since raised $185-million, with a primary focus of investing in growth companies in the technology, media and healthcare sectors.

In a report published Monday, National Bank’s Mr. Thompson said his analysis suggests a downside share value of $2.30, and an upside value per share of $4.60.

The analyst says Difference Capital is entering the tech cycle at a time when mergers and acquisitions are strong “and the IPO window is open.”

The report notes that some early investments do not appear stellar, but it highlights the experience, financial commitment, and rolodex of Mr. Wekerle — known in the industry as Wek — and the team of veteran investment bankers, researchers, and advisors he has assembled.

Mr. Wekerle, whose title at Difference Capital is executive chairman, is the largest shareholder with 25% of outstanding share capital and $11-million of debentures. Before launching Difference, Mr. Wekerle established himself as a legendary trader and co-founder of the sales and trading operations of Griffiths McBurney, which was later renamed GMP Securities. He left the independent dealer in 2011 after 15 years.

Beyond the credentials of Mr. Wekerle, the National Bank report says Difference Capital has added credibility from key board members and advisors. Among them are John Albright, a major Canadian venture capital investor, Ivan Fecan, the former president and chief executive of CTVglobemedia, and seasoned financial strategists Wes Hall and Riyaz Lalani.


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