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Stockhouse Movers & Shakers: B.C. brokerage plays the China card

Peter Kennedy Peter Kennedy, Stockhouse
0 Comments| October 21, 2011

Vancouver brokerage firm Leede Financial Markets Inc. is setting itself up to take advantage of the opportunities it believes will flow from the future sale of Canadian resource assets to the Chinese.

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In an interview, Leede Chairman Gord Medland said last week’s $2.2 billion bid by Sinopec International Petroleum Exploration for Alberta energy firm Daylight Energy Ltd. (TSX: T.DAY, Stock Forum) is just the latest example of what lies ahead as China moves to meet the needs of its 1.35 billion residents.

As China increasingly looks to Canada for key commodities including oil, gas and agri products, Medland said the key challenge is to identify good Canadian assets that are of interest to the Chinese and help them to become early investors in those assets.

“I have spent a fair amount of time in China and I have a reasonably good read on what is going on,’’ said Medland, a 30-year veteran of the Canadian investment industry.

To get a better sense of how the Chinese do business and an understanding of what they want and how they might want it, Leede is sponsoring two Chinese nationals in Canada. One is a former Simon Fraser University student, who has a Masters degree in Economics. She is now working as a trainee at Leede. The other is a lawyer from Beijing, who is moving to Vancouver.

While utilizing their knowledge and contacts to open doors, the company is also planning to run seminars in a bid to attract wealthy Chinese immigrants who are already living in Vancouver and might be looking for investment opportunities outside of the real estate sector.

Medland said “embracing the Chinese challenge” only makes sense for a small brokerage like Leede, which is being forced to become ever more entrepreneurial in light of the fact that smaller brokerages are getting hammered on all sides from a myriad of industry and market forces. They include:

  • Exempt market dealers on the underwriting side of the business.
  • Discount brokers
  • Bank-owned dealers who are trying to monopolize trading and clearing systems
  • Low interest rates.

“It means you have to get leaner, meaner and tighter,’’ Medland said.

With 125 employees on the payroll and offices in Vancouver, Kamloops and Calgary, Leede has a well known focus on retail clients and early stage resource exploration. Companies it has helped to finance in recent months include:

Angkor Gold Corp.  (TSX: V.ANK, Stock Forum), a Calgary-based junior engaged in early stage exploration for gold and base metals in Cambodia. It recently raised $3 million via a brokered financing while completing the reverse takeover of Prairie Pacific Mining Corp. “Cambodia is not well explored and we view that as an opportunity,’’ Medland said.

Angkor closed at 38 cents on Friday after trading in a 52-week range of 49 cents and 30.5 cents, giving the company a market cap of $23 million, based on 61 million shares outstanding.

49 North Resources Inc. (CDX: V.FNR, Stock Forum), a resource investment company with a focus on Saskatchewan. With $65 million in assets under management, it was set up to invest early stage exploration projects, such as coal, diamonds, uranium, gold and rare earths.

Other stocks on Medland’s radar screen include:

Invicta Energy Corp. (CDX: V.VCA, Stock Forum), an emerging oil and gas company, with a focus on Alberta and Saskatchewan. It traded at 13 cents Friday, in a 52-week range of 35 cents and 5 cents, giving the company a market cap of $7.1 million, based on 54.6 million shares outstanding.

Anderson Energy Ltd. (TSX: T.AXL, Stock Forum). It traded at 50 cents Friday in a 52-week range of $1.36 and 35 cents, giving the company a market cap of $86 million, based on 172.5 million shares outstanding.

Ridge Line Energy Services Inc. (CDX: V.RLE, Stock Forum). It trading at 52 cents Friday in a 52-week range of 75 cents and 35 cents, giving the company a market cap of $32 million, based on 61.6 million shares outstanding.

Asia Bio-Chem Group Corp. (TSX: T.ABC, Stock Forum), traded at 35 cents Friday in a 52-week range of $1.64 and 18 cents, giving the company a market cap of $29 million, based on 85 million shares outstanding.

Medland said Leede officials will use their expertise to teach Chinese nationals how the investment business works in Canada, getting them involved at the seed stock level, and first prospectus issues.

“We are basically running around, and introducing people to people,’’ he said. “We are just doing it with Chinese people instead of the people that we used to work with.’’


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