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Value Capital Trust can complete certain types of M&As and financings on a more tax-efficient basis than a traditional capital pool

By Jade Hemeon |

 

Echelon Wealth Partners Inc. and law firm Borden Ladner Gervais LLP (BLG), both based in Toronto, have formed a partnership to create the first trust in Canada that qualifies as a "capital pool company" under the policies of the TSX Venture Exchange (TSXV).

Value Capital Trust can complete certain types of mergers, acquisitions and financings on a more tax-efficient basis than a traditional capital pool that's organized as a corporation but can later convert to a trust structure if desired. The trust structure is often preferred for real estate investment trusts (REITs) and other businesses that distribute income to investors because of its tax and cost advantages.

"Value Capital Trust exemplifies the kind of financial innovation that adds value to clients, but also to the Canadian capital markets generally by developing creative solutions to help clients grow their businesses more effectively," says David Anderson, head of investment banking at Echelon, in a statement.

Value Capital Trust's initial public offering was over-subscribed, he notes, and Echelon expects to form several more of these off-the-shelf trust structure capital pool corporations with BLG in the near future to capitalize on the strong demand seen from investors.

"Value Capital Trust significantly streamlines the listing process for a future REIT or trust listing candidate by removing the need for a conversion from company to trust at the time of listing," says Brady Fletcher, managing director of the TSXV, in a statement.

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