Shares of GMP Capital (TSX:GMP) jumped on Friday with the release of its third quarter financials which featured strong results from the company’s investment banking arm and financing activity in emerging markets such as cannabis and blockchain.
And they’re not done yet, says President and CEO Harris Fricker, who argues that although the blockchain space may not be the market frenzy it was a year ago, activity on the private equity side is huge.
Earlier today, GMP reported its Q3 2018 earnings which included revenue of $59.2 million, a 72 per cent year-over-year improvement, with the company’s net income climbing to $2.9 million compared to last year’s net loss of $2.8 million and an EPS of $0.02 per share compared to last year’s negative $0.06 per diluted share.
The company also declared a special cash dividend of $0.075 per common share and reinstated its quarterly cash dividend of $0.025 per common share, a testament to GMP’s “vastly improved” operating performance and positive outlook, says Fricker.
“Leading the way was our strong Canadian Capital Markets business, which continues to be the main driver of profitability, growing revenue by 186 per cent across multiple sectors,” said Fricker in a press release . “We also remain encouraged that our early leadership position in the financing of emerging opportunities in cannabis and blockchain has provided the key ingredients for a step change in our non-resource franchise.”
GMP has been a major underwriter in financing rounds for Canadian cannabis companies, many of whom have seen their market capitalizations skyrocket over the past year and a half. The same goes for companies in the blockchain space like Hive Blockchain (TSXV:HIVE) and Big Blockchain Intelligence Group (CSE:BIGG).
But while interest in cannabis companies continues apace, notwithstanding the recent pullback, public blockchain companies and their cryptocurrencies cousins seem to have had their heyday around the back end of 2017, when the price of bitcoin was defying expectations and companies like Long Blockchain Corp were making headlines.
In reality, the drop-off has little to do with the technology’s potential, says Fricker. “We’re seeing an enormous amount of activity in the private capital side,” he says, in conversation with BNN Bloomberg . “Silicon Valley has come into blockchain through private equity funds in a major way, especially in this quarter. The other thing we’re seeing is a lot of work being done on the infrastructure. The custody solution [is coming] probably Q1, Q2, and we’ll see the big four accounting firms starting to render audits on crypto, we think, for fiscal 2019.”
Fricker also points to interest from trusts, pension funds and endowments which will only grow as time goes by.
“Basically, they’re saying, ‘We need exposure to crypto, we need portfolio weighting,’” he says. “We’re just going to see that across the board as that deepens. So while the markets have been quiet, the level of activity has been unabated, and we’ve been pretty active on advisory on the private side.”