Founders Retain Minority Stakes as Leading Mortgage Lender Prepares for Next Phase
First National Financial Corp. has reached a definitive agreement to be acquired by Birch Hill Equity Partners and Brookfield Asset Management in a landmark $2.9 billion transaction. The deal marks a major step for one of Canada’s largest non-bank mortgage lenders, while its founders Stephen Smith and Moray Tawse will maintain significant minority ownership.
Deal Overview: $48 Per Share in Cash
Under the agreement, a new entity named Regal Bidco Inc. will purchase all outstanding First National common shares—except those retained by Smith and Tawse—at $48 per share in cash. This price reflects a 15% premium over the company’s 30-day volume-weighted average and exceeds its 52-week high, making it highly favorable for shareholders.
After the deal closes, Stephen Smith and Moray Tawse will each hold an approximate 19% indirect ownership, having sold about two-thirds of their original stakes. Before the sale, they held 37.4% and 34% of the company’s outstanding shares respectively.
Leadership and Growth Plans
Jason Ellis, current CEO of First National, will remain in his role post-acquisition.
“This transaction opens an exciting new chapter for First National. With the backing of Birch Hill and Brookfield, we look forward to expanding our platform, driving innovation, and delivering greater value for our customers, employees, and institutional partners,” said Ellis.
The new ownership structure is expected to accelerate growth and strengthen the company’s position within the Canadian mortgage industry.
Shareholder and Regulatory Approval
The transaction is projected to close in Q4 2025, subject to approval from shareholders, the courts, and regulators.
A special committee of independent directors led the review process, considering multiple bids. BMO Capital Markets, acting as independent financial advisor, confirmed the fair market value of shares to be between $44 and $50, and deemed the $48 offer fair to shareholders.
Ownership Structure After Closing
- Birch Hill and Brookfield will collectively hold 62% ownership.
- Smith, Tawse, and their affiliates will retain the remaining 38% equity stake.
Impact on Preferred Shares and Notes
- Preferred Shares: Series 1 and Series 2 will remain listed on the Toronto Stock Exchange (TSX) and continue regular trading.
- Dividends: The company will maintain its regular dividend payments until closing.
- Unsecured Notes: Series 3, 4, and 5 will be redeemed upon closing, with holders receiving the redemption price plus accrued interest.
From IPO to Privatization: A Remarkable Growth Story
First National debuted on the Toronto Stock Exchange in 2006 at just $2.15 per share (split-adjusted). With dividends included, the $48 purchase price represents more than 2,100% total shareholder return since its IPO.
Today, the company administers over $155 billion in mortgages, ranking it among the largest non-bank lenders in Canada. Industry analysts will closely watch how the new ownership influences broker partnerships, mortgage strategies, and technology-driven innovation.
Next Steps: Shareholder Vote
A special shareholder meeting is scheduled for September 2025 to vote on the proposed acquisition. If approved, First National’s common shares will be delisted from the TSX, marking the end of its nearly two-decade run as a public company.
