J.C. Flowers & Co. LLC ("J.C. Flowers") and Värde Partners, Inc. ("Värde Partners") completed its sale of Fairstone Financial Holdings Inc. ("Fairstone" or "the Company") to Duo Bank of Canada, a Toronto-based financial services provider supported by Stephen Smith, Centerbridge Partners L.P. and Ontario Teachers' Pension Plan Board.
Fairstone, through its operating subsidiary, Fairstone Financial Inc., is a Canadian provider of responsible lending solutions for near-prime borrowers with over $3 billion in assets on a consolidated basis. Fairstone, including through its predecessors, has close to a 100-year history of providing Canadians with access to responsible credit. The company has two key business lines: lending directly to consumers through its branch network and online and financing consumer retail and car purchases through retailers and dealerships. Fairstone is headquartered in Montreal, Quebec.
Värde Partners and J.C. Flowers acted as equal partners in the transaction, which began in 2017 when the investor group acquired CitiFinancial Canada from Citi and rebranded the Company as Fairstone. Under the ownership of J.C. Flowers and Värde Partners, Fairstone has acted as a non-bank provider of responsible credit solutions for near-prime borrowers. During J.C. Flowers' and Värde Partners' ownership, Fairstone more than doubled its operating net income through the course of operational and financing improvements.
J.C. Flowers is a private investment firm dedicated to investing globally in the financial services industry. Founded in 1998, the firm has invested more than $16 billion of capital, including co-investment, in 58 portfolio companies in 18 countries across a range of industry subsectors including banking, insurance and reinsurance, securities firms, specialty finance and services and asset management. With approximately $6 billion of assets under management, J.C. Flowers has offices in New York and London.
Värde Partners is a global alternative investment firm with roots in credit and distressed. Founded in 1993, the firm has invested more than $75 billion since inception and manages over $14 billion on behalf of a global investor base. The firm's investments span corporate and traded credit, real estate and mortgages, private equity and direct lending. Värde Partners employs more than 300 professionals worldwide with offices in Minneapolis, New York, London, Singapore and other cities in Asia and Europe.
Duo Bank is a Schedule I Canadian Bank. Duo Bank focuses on turnkey and customizable financial services solutions designed to deepen customer loyalty and grow sales. The growing complement of products and services includes credit cards, rewards programs and related protection services and deposits. Headquartered in Toronto, Duo Bank is privately held by an investor group led by funds managed by affiliates of Stephen Smith, Centerbridge Partners, L.P. and Ontario Teachers’ Pension Plan Board.
Stephen Smith, a financial services entrepreneur, is chairman, chief executive officer and co-founder of First National Financial Corporation. He is chairman of Canada Guaranty Mortgage Insurance Company, which he owns in partnership with Ontario Teachers' Pension Plan Board
Centerbridge Partners, L.P. is a private investment management firm. The firm was founded in 2005 and as of Nov. 30, 2020 has approximately $28 billion in capital under management with offices in New York and London. Centerbridge is dedicated to partnering with management teams across targeted industry sectors and geographies to help companies achieve their operating and financial objectives.
The Ontario Teachers' Pension Plan Board (Ontario Teachers') is the administrator of Canada's largest single-profession pension plan. Ontario Teachers' is an independent organization headquartered in Toronto. Its Asia-Pacific regional offices are in Hong Kong and Singapore, and its Europe, Middle East and Africa region office is in London. The defined-benefit plan, which is fully funded as of Jan. 1, 2020, invests and administers the pensions of the province of Ontario's 329,000 active and retired teachers.
Sally Rocker represented J.C. Flowers in-house.
Mark Rabogliatti represented Värde Partners in-house.
Stikeman Elliott LLP represented J.C. Flowers and Värde Partners with a team including
Jeff Li (M&A);
Vanessa Clusiau (tax);
Jonathan Auerbach (intellectual property);
Serge Levy (banking);
Meaghan Obee Tower (regulatory);
Stephanie Pasternyk (employment);
Natasha vandenHoven (pension and benefits);
David Feldman (competition);
Mario Paura (real estate);
Zev Smith (litigation);
Jordan Altman (corporate).
Susanne Clark and Jeff Goldfarb represented Centerbridge Partners L.P. in-house.
Jackie Taitz represented Ontario Teachers’ in-house.
Heather Lee represented Duo Bank of Canada in-house.
Torys LLP represented Duo Bank of Canada with a team including
Sarah Strong (M&A);
Matthew Angelus (regulatory and consumer protection);
Erin Shin (lending);
Vidushi Hora (securitization);
Jerald Wortsman (tax);
Tom Stevenson (employment);
Edward Fan (intellectual property);
Zee Derwa (competition);
Alicja Puchta (litigation).
McMillan LLP acted as legal counsel to Stephen Smith with a team including
Ted Scott (corporate and M&A),
Maria Sagan (financial services).
Willkie Farr & Gallagher LLP acted as legal counsel to Centerbridge Partners L.P.
Osler, Hoskin & Harcourt LLP acted as legal counsel to Ontario Teachers’ Pension Plan with a team consisting of
Arielle Kaplan (corporate),
Patrick Marley (taxation).