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Canaccord Financial Inc. announces Asia expansion

22 November 2010

TORONTO, November 22, 2010 – Canaccord Financial Inc. (“Canaccord” or “the Company”) announces today that it is expanding its operations into Asia with the acquisition of The Balloch Group, a leading boutique Chinese investment bank, and a strategic agreement with the Export-Import Bank of China (“China Eximbank”). Together, these initiatives represent an important entry into Asia for Canaccord that will add to its global capabilities and the services it provides clients, while leveraging the strength of the Company’s sector coverage, particularly in the mining, energy, clean technology and life sciences space. 

Canaccord’s operations in China will be branded Canaccord Genuity Asia and will focus primarily on:

-          Providing advisory services to businesses in the region,
-          Advising Chinese companies on their outbound investment and international mergers and acquisitions,
-          Advising international companies on entering Asian markets,
-          Helping Asian companies raise capital on international markets, and,
-          Facilitating Chinese financing for international projects.

“Canaccord Genuity Asia will combine the strength of our global platform and expertise in advising and raising capital for growth companies, with The Balloch Group’s strong client relationships and established investment banking presence in China,” noted Paul Reynolds, President and CEO of Canaccord Financial Inc.  “We are committed to better serving our clients in this important growth market and growing Canaccord’s platform in Asia.  Our new partners from The Balloch Group and our collaboration with the Export-Import Bank of China will anchor our expansion efforts in the region.”

ACQUISITION OF THE BALLOCH GROUP:

Canaccord has agreed to purchase The Balloch Group for C$4.0 million, and is establishing an equity incentive plan for its principal employees that will provide for an additional payout of up to 1,187,847 Canaccord common shares (C$13.5 million based on an issue price of $11.37). These shares will be earned over five years in proportion to meeting revenue targets totaling C$100 million for Canaccord’s operations in Asia. The acquisition is expected to close on January 3, 2011.  At that time, Canaccord intends to change the name of The Balloch Group to Canaccord Genuity Asia Limited and its operations will be fully integrated within Canaccord Genuity.

Howard Balloch, a distinguished industry executive who has built respected relationships with many key stakeholders in China, will become the Chairman of Canaccord Genuity Asia.  Mr. Balloch was previously the Canadian Ambassador to China and has spent the last fifteen years in the country.  Following the close of the acquisition, Mr. Balloch will also be appointed as a director on Canaccord Financial Inc.’s board of directors.

“I look forward to working with my new partners at Canaccord Genuity,” said Howard Balloch, President of The Balloch Group and incoming Chairman of Canaccord Genuity Asia.  “By combining the strength of Canaccord’s global platform with our existing relationships in China, we will be able to identify even more opportunities for our clients and expand our service offering.” 

The Balloch Group will add significant capabilities to Canaccord’s global platform, while benefitting from the strength of Canaccord’s focused sector coverage, advisory expertise, strong balance sheet and global client relationships.  The firm was ranked as the number one boutique investment bank in China in 2008 and 2009 by ChinaVenture. 

STRATEGIC AGREEMENT WITH CHINA EXIMBANK:

Canaccord’s new cooperative agreement with the Export-Import Bank of China will provide China-based clients with an enhanced ability to grow operations internationally, while also providing Canaccord’s international clients with increased access to Chinese debt financing.

The agreement between Canaccord and China Eximbank is mutually beneficial, requires no financial commitment and provides substantial opportunity for the organizations to partner on projects in the energy, mining and infrastructure sectors.

The terms of the agreement will provide both parties with access to industry information and expertise when mutually beneficial opportunities arise.  It will allow the organizations to better identify opportunities for clients by combining and comparing sector information. 

“By partnering with Canaccord we can identify new opportunities to work with companies in sectors of strategic importance and help finance their growth initiatives,” said Mr. Ruogu Li, Chairman and President of the Export-Import Bank of China.  “We look forward to collaborating on new projects and investments within the energy, mining and infrastructure sectors.”

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