Bear, Lehman, Octagon?

It might be a sign of the tough times on Bay Street, but the website at boutique investment dealer Octagon Capital has been “down” for the past couple of days. Let’s hope it is a problem at the server farm, and not something more ominous.

Canadian growth companies have enough trouble raising capital without further shrinkage in the dealer network.

Which brings up a different, but equally relevant question: if the major independent U.S. investment banks can’t go it alone (see prior post “Richard Nesbitt: end is nigh for Goldman and Morgan Stanley” September 15-08), how long will it be before Canaccord Capital or GMP Securities decide to “consider their strategic alternatives”?

Not that they have to, but it appears to be very much a buyers market right now.

ScotiaBank has made its play for Dundee and C.I. Funds. National Bank bought their minority stake in Wellington West Capital Markets. Macquarie bought Orion Securities. Thomas Weisel acquired Westwind Partners. C.I. acquired Blackmont.

One has to assume that the attractiveness of the Canaccord, Cormark and GMP platforms is not lost on the likes of institutions such as Manulife (MFC:TSX) or National Bank (NB:TSX), for example. But with C.I. now likely out of the market, there may well be fewer dance partners to go around.

Buying an investment bank at the peak seems more common than during a market trough. Why exactly is that?

Interesting times ahead.

MRM