David Kassie is a legend on Bay Street. From building CIBC World Markets into a dominant force, to founding Genuity and transforming it into Canaccord Genuity, his fingerprints are on some of the most influential deals and institutions in Canadian finance. But in this episode of In the Money with Amber Kanwar, Kassie goes beyond the deals to talk candidly about the state of Canada’s capital markets and what needs to change.
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- Consolidation Hinders Small-Cap Innovation
Kassie expressed concern over the increasing consolidation in Canada’s investment banking sector, where major banks now command 90-95% of underwriting syndicates, a sharp rise from under 50% two decades ago. This dominance has reduced liquidity and research support for small-cap companies, stifling entrepreneurial growth.- Fewer independent dealers limit capital access for smaller firms.
- Reduced research and trading activity hampers market vibrancy.
- Kassie advocates for a proactive regulator to foster competition, enabling more independent dealers to support innovation and entrepreneurship.
- Private Credit: A Looming Risk in the Markets
Kassie flagged private credit as a potential trigger for the next financial crisis, noting that while leading firms excel, newer entrants are pursuing risky loans to chase high management fees. The industry’s shift toward asset accumulation over performance-based returns raises concerns.- Private credit’s growth is driven by base management fees, inflating valuations.
- A market downturn could expose liquidity vulnerabilities, impacting valuations.
- Kassie urges caution, emphasizing the need to monitor this sector closely.
- A Bold Vision for Canada’s Economic Future
Reflecting on Canada’s economic trajectory, Kassie outlined a strategic path to revitalize growth and innovation over the next decade. He emphasized the importance of fostering a dynamic, diversified economy.- Develop a robust industrial strategy, including LNG and trade diversification beyond the U.S.
- Support emerging industries to scale domestically, rather than selling to foreign entities.
- Leverage Canada’s world-class universities and immigration strengths to attract global talent, reversing the brain drain and positioning Canada as an innovation hub.
