Birch Hill Equity Partners and Brookfield Asset Management have acquired a majority stake in First National Financial Corporation for $2.9 billion.

First National said the previously announced deal has been completed under a plan of arrangement in accordance with Ontario’s Business Corporations Act. Birch Hill and Brookfield purchased the residential and commercial mortgage provider through a newly formed acquisition vehicle. Similar to a U.S. special-purpose acquisitions company (SPAC) the partners’ firm was created solely with the intention of acquiring First National and has no other business operations.

The buyers acquired all of the outstanding shares not controlled by First National co-founders Stephen Smith and Moray Tawse, together with their associates and affiliates, for $48 per share. Birch Hill and Brookfield purchased a 62% interest, while Smith and Tawse each retained an indirect 19% stake.

As a result of the deal, First National’s board has been increased to 10 directors from nine, with Tawse chairing it. William Stone is expected to join the board as an 11th director. The management team remains the same.

Birch and Brookfield now hold First National through Regal Holdings, a limited partnership containing private-equity funds that hold the 62% interest.

First National, through subsidiary First National Financial LP, has approximately $160 billion of mortgages under administration, ranking as one of Canada’s largest non-bank mortgage originators and underwriters.

Photo: First National