Street Capital to be acquired by RFA Capital for $85 million

TORONTO — Mortgage lender Street Capital Group Inc. has agreed to be acquired by RFA Capital Holdings Inc. in a cash deal worth about $85 million.

The Canadian-owned investment company focused on real estate will acquire all issued and outstanding common shares of Street Capital for 68 cents each, representing a 36-per-cent premium to Street's closing share price on Friday.

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Under the deal, Street Capital would gain access to up to $5 billion of new mortgage funding.

RFA has also committed to increase the equity capital of Street's wholly owned subsidiary, Street Capital Bank of Canada, by a minimum of $50 million, with significant follow-on capital available.

Street Capital says the transaction is the culmination of a strategic review of alternatives it began in early 2019, during which it received indications of interest from several parties.

Street Capital's chief executive Duncan Hannay says the transaction with RFA will improve its financial strength during its formative stage as a Schedule 1 bank and positions the business for long-term growth.

Companies in this story: (TSX:SCB)

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