Investing
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Of Note:

GMP Capital Inc., the second-worst performing financial services stock in Canada this year, plans to compete against
larger banking rivals by presenting “disruptive” ideas to clients, the company’s new chief executive officer said.

The brokerage firm's incoming chief executive officer, Harris Fricker, has a mandate to bring on the next generation.

Much of the original team is still around GMP, from mining financier extraordinaire Gene McBurney to trading boss
Mike Wekerle to Kevin Sullivan, the man who is stepping down as CEO to hand the job to Mr.Fricker on Oct. 1.



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GMP Capital's chief executive officer, Harris Fricker, right, takes over from Kevin Sullivan, left.    The Globe and Mail




Tuesday, August 24, 2010 4:38 PM
GMP's coming youth movement

Boyd Erman
The Globe and Mail


Look out for a youth movement at GMP Capital Inc.

The brokerage firm's incoming chief executive officer, Harris Fricker, has a mandate to bring on the next generation.

Much of the original team is still around GMP, from mining financier extraordinaire Gene McBurney to trading boss Mike Wekerle to Kevin Sullivan, the man who is stepping down as CEO to hand the job to Mr. Fricker on Oct. 1.

When the brokerage has needed new blood, it has tended to go for high-priced free agents, rather than drafting and growing talent. Under Mr. Fricker, look for that to change.

Mr. Fricker isn't much younger than Mr. Sullivan -- 46 v. 50 -- but as a more recent arrival at the firm he is viewed as part of the new guard.

"Harris has really got the ear of the next generation of guys at GMP," said Mr. Sullivan in an interview shortly after the change was officially announced Tuesday. " It’s about showing them, and him, that there is upside as well. I’m a big believer that great organizations have to change. They have to evolve."

"At this stage in our evolution we’re a highly desirable place for young people to come and work and Harris has showed great leadership in attracting and mentoring and developing young people," said Mr. Sullivan. "We have to get better at that. It was not a personal strength of mine."

Mr. Fricker said that won't mean turnover.

However, it seems a clear signal that no seat is safe for the incumbent if there's a hot young banker who can challenge for it.

"We think we’ve got some fantastic young people who are just entering the sweet spot of their career, who are ready, willing and able to take up the challenge. I don’t see it so much as turnover as allowing the next generation to step into its place at this stage in their evolution."

Mr. Fricker said that GMP has also to change from being something based on the strengths of the individuals who built the firm into something more enduring.

"In the parlance of sports, we have been an exceptional team," Mr. Fricker said. "But the business through Kevin’s stewardship has grown, it’s become much more complex. It’s probably time now to transition from being a great team to being a really good franchise."

"We’ve done a good job of maintaining our traditional DNA,," he added later. "Now we have to factor in the whole issue of governance and alignment of interest [with shareholders]."

That means finding ways to get more GMP stock into the hands of younger workers at the firm.

"We want to get that ownership into the next tier of the firm," Mr. Fricker said. The direct-drive compensation model that's made GMP an enriching place to work in good times isn't going anywhere, he said, because that ties pay to performance and is too ingrained in the culture.

There are a few other changes in store as well. GMP is looking at expanding its commodity banking operations to serve other areas of the globe, with Brazil a possibility.

"We believe there are other markets that are experiencing very similar dynamics where we can on a low-risk basis exploit our natural business proposition here in Canada to the benefit of some international exposure," Mr. Fricker said.

Another growth area is bonds. The brokerage is an equity specialist, but with clients moving into the bond world seeking income and stability, it's looking more and more that GMP will follow.

"A fixed income component to the firm is something we’ve looked at for some time," Mr. Sullivan said. He said GMP hasn't settled on the right way to do it "but it’s a natural evolution, particularly in the higher-yielding fixed-income business."

Mr. Fricker plans to stick with GMP's investment in private equity, even though its been a rocky road since buying EdgeStone Capital Partners.

"The fundamentals didn't that dramatically change," Mr. Fricker said. "The banks will be back to the lending table and private equity will flourish again, and it’s Kevin's and my job to ensure that EdgeStone is robust as a going concern and lives to fight another day in a better market."


The Globe and Mail


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GMP’s Fricker Plans Growth From ‘Disruptive’ Ideas

August 25, 2010, 10:46 AM EDT


By Sean B. Pasternak
Bloomberg
Businessweek



Aug. 25 (Bloomberg) -- GMP Capital Inc., the second-worst performing financial services stock in Canada this year, plans to compete against larger banking rivals by presenting “disruptive” ideas to clients, the company’s new chief executive officer said.

“I think one of the currencies we’re known for, whether it’s to buy-side clients or sell-side corporate clients, is disruptive ideas,” said Harris Fricker, who will become CEO on Oct. 1. “I think that disruption arises from the fact that the guys who founded the business were entrepreneurs, and typically our clients are entrepreneurs.”

Bringing new ideas to clients helped GMP become the top equity underwriter in Canada this year, overseeing 34 sales valued at $2.4 billion, according to Bloomberg data. The Toronto-based brokerage co-led the C$1.35 billion ($1.2 billion) initial public offering of Athabasca Oil Sands Corp., Canada’s largest IPO in 2010. Athabasca has dropped 43 percent since the IPO.

“If we can be disruptive in a business and it’s complementary to our core skill set, we’re going to do it every time,” said Fricker, in an interview yesterday.

Fricker, 46, an Oxford University graduate who attended as a Rhodes Scholar, joined GMP in 2002 after working at companies including Bank of Nova Scotia and Toronto-Dominion Bank. He said he plans to transform GMP from a “being a great team to being a great franchise.”

Part of that will come from finding “synergies” between GMP’s investment dealer and private-client businesses, he said. Measures may include “aggregating” the company’s buying power, Fricker said.

Deputy Chairman

GMP announced yesterday that Fricker will replace Kevin Sullivan, who joined GMP as a partner in 1995. Sullivan will become deputy chairman and focus on “client-facing” initiatives.

“I’m going to spend my time helping to build client relationships for all of our operating companies,” said Sullivan, 51. That will include “helping the next generation develop their client relationships by having the ability to bring a senior statesmen and company founder along with them.”

GMP shares have plunged 23 percent this year, compared with a 6.6 percent drop for the 41-member S&P/TSX Financials Index. The stock fell 10 cents to C$9.75 in 10:36 a.m. trading on the Toronto Stock Exchange.

“We try not to focus on the day-to-day activity in the stock market,” said Sullivan. “It would be untrue to say that we’re not disappointed by the performance of the stock this year.”

--Editor: David Scanlan


Bloomberg
Businessweek


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