Birch Hill and Brookfield to Acquire First National in $2.9 Billion Deal
| 2025-07-30
Birch Hill and Brookfield to Acquire First National in $2.9 Billion Deal
Brookfield and Birch Hill to acquire Canadian mortgage lender First National for $2.9 billion, with founders retaining a minority stake in the company.
Brookfield and Birch Hill Announce Takeover of First National in C$2.9 Billion Deal
Private equity firms Brookfield Asset Management and Birch Hill Equity Partners are set to acquire Canadian mortgage lender First National Financial Corporation in a deal valued at C$2.9 billion. The transaction will see the company taken private, with its founders retaining a minority shareholding.
The acquisition, announced this week, will be executed through Regal Bidco Inc., a newly established entity. It will purchase all outstanding common shares—excluding those held by founders Stephen Smith and Moray Tawse—for C$48 per share in cash. This represents a 15% premium over the 30-day volume-weighted average price and exceeds the company’s 52-week high.
Subject to regulatory, court, and shareholder approval, the transaction is expected to be completed by the fourth quarter of 2025. A shareholder vote is scheduled for September.
Founders to Retain Minority Holdings
Stephen Smith and Moray Tawse, who currently hold 37.4% and 34% of the company’s outstanding shares respectively, will each retain approximately 19% indirect ownership in First National after the deal. This follows the sale of roughly two-thirds of their current holdings.
Chief Executive Officer Jason Ellis will remain in his role following the transaction. In a statement, he described the agreement as “the start of an exciting new chapter” and welcomed the strategic expertise brought by the new owners.
“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,” Mr Ellis said.
Independent Review Supports Offer
The sale follows a strategic review process led by a special committee of independent directors and financial advisors. According to the company, multiple acquisition proposals were evaluated. The final offer from Brookfield and Birch Hill was judged the most favourable for shareholders.
BMO Capital Markets, acting as an independent valuator, estimated the fair market value of First National’s shares to be between C$44 and C$50. It concluded that the C$48 per share offer to public shareholders was financially fair.
Once the transaction is completed, Birch Hill and Brookfield will control approximately 62% of First National’s equity. The remaining 38% will be held by the founders and their affiliates.
Preferred Shares and Notes Update
The company confirmed that its preferred shares—Series 1 and Series 2—will continue trading on the Toronto Stock Exchange after the deal closes. Regular dividend payments will continue until that time.
However, First National’s unsecured notes—Series 3, 4 and 5—will be redeemed upon closing. Investors holding these securities will receive the applicable redemption price plus any accrued interest.
From Public Listing to Private Ownership
First National made its public market debut in 2006 at a split-adjusted price of C$2.15 per share. The current offer price, when combined with dividend payments over the years, implies a total shareholder return exceeding 2,100%, according to company data.
With more than C$155 billion in mortgages under administration, First National is one of Canada’s largest non-bank mortgage lenders. The company is known for its strong relationships with mortgage brokers and a platform that primarily serves prime residential borrowers.
Context: Broader Private Equity Interest in Canadian Mortgage Sector
This acquisition underscores growing private equity interest in Canada’s non-bank mortgage lending sector. First National’s prominence outside the country’s traditional banking institutions makes it a strategic asset in an increasingly competitive housing finance landscape.
The move by Brookfield and Birch Hill follows a series of similar investments in Canadian financial services, including Brookfield’s ownership of Sagen Mortgage Insurance Company. The firms are expected to bring operational expertise and capital that may support further platform development and innovation.
If approved, First National’s common shares will be delisted from the Toronto Stock Exchange, completing its transition from public to private ownership.
Private equity firms Brookfield Asset Management and Birch Hill Equity Partners are set to acquire Canadian mortgage lender First National Financial Corporation in a deal valued at C$2.9 billion. The transaction will see the company taken private, with its founders retaining a minority shareholding.
The acquisition, announced this week, will be executed through Regal Bidco Inc., a newly established entity. It will purchase all outstanding common shares—excluding those held by founders Stephen Smith and Moray Tawse—for C$48 per share in cash. This represents a 15% premium over the 30-day volume-weighted average price and exceeds the company’s 52-week high.
Subject to regulatory, court, and shareholder approval, the transaction is expected to be completed by the fourth quarter of 2025. A shareholder vote is scheduled for September.
Founders to Retain Minority Holdings
Stephen Smith and Moray Tawse, who currently hold 37.4% and 34% of the company’s outstanding shares respectively, will each retain approximately 19% indirect ownership in First National after the deal. This follows the sale of roughly two-thirds of their current holdings.
Chief Executive Officer Jason Ellis will remain in his role following the transaction. In a statement, he described the agreement as “the start of an exciting new chapter” and welcomed the strategic expertise brought by the new owners.
“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,” Mr Ellis said.
Independent Review Supports Offer
The sale follows a strategic review process led by a special committee of independent directors and financial advisors. According to the company, multiple acquisition proposals were evaluated. The final offer from Brookfield and Birch Hill was judged the most favourable for shareholders.
BMO Capital Markets, acting as an independent valuator, estimated the fair market value of First National’s shares to be between C$44 and C$50. It concluded that the C$48 per share offer to public shareholders was financially fair.
Once the transaction is completed, Birch Hill and Brookfield will control approximately 62% of First National’s equity. The remaining 38% will be held by the founders and their affiliates.
Preferred Shares and Notes Update
The company confirmed that its preferred shares—Series 1 and Series 2—will continue trading on the Toronto Stock Exchange after the deal closes. Regular dividend payments will continue until that time.
However, First National’s unsecured notes—Series 3, 4 and 5—will be redeemed upon closing. Investors holding these securities will receive the applicable redemption price plus any accrued interest.
From Public Listing to Private Ownership
First National made its public market debut in 2006 at a split-adjusted price of C$2.15 per share. The current offer price, when combined with dividend payments over the years, implies a total shareholder return exceeding 2,100%, according to company data.
With more than C$155 billion in mortgages under administration, First National is one of Canada’s largest non-bank mortgage lenders. The company is known for its strong relationships with mortgage brokers and a platform that primarily serves prime residential borrowers.
Context: Broader Private Equity Interest in Canadian Mortgage Sector
This acquisition underscores growing private equity interest in Canada’s non-bank mortgage lending sector. First National’s prominence outside the country’s traditional banking institutions makes it a strategic asset in an increasingly competitive housing finance landscape.
The move by Brookfield and Birch Hill follows a series of similar investments in Canadian financial services, including Brookfield’s ownership of Sagen Mortgage Insurance Company. The firms are expected to bring operational expertise and capital that may support further platform development and innovation.
If approved, First National’s common shares will be delisted from the Toronto Stock Exchange, completing its transition from public to private ownership.
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