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Colliers International: This Spinoff Could Run Out Of Steam

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TSI Wealth Network


  • Company spun out of FirstService Corporation in 2015.
  • Multiple acquisitions driving growth.
  • Asset light and very profitable business.
  • Full valuation and high growth expectations leave room for disappointment.

[Please note that all amounts are in U.S. dollars.]

Colliers International Group $70.30 (Nasdaq symbol CIGI; Manufacturing & Industry sector; Shares outstanding: 37.8 million; Market cap: $2.7 billion; www.colliers.com) is a global real estate services company headquartered in Toronto, Canada. The company commenced trading on the Nasdaq and Toronto stock exchanges in its current form in June 2015 but its origins date back to 1898 when Macaulay Nicolls was founded in Vancouver, Canada.

In 2004, FirstService, a company started by Jay Hennick, the current Chairman of Colliers, acquired the largest operations of Colliers. Through various acquisitions, the company developed into a global real estate business, with 12,000 employees located in 282 offices in 35 countries.

A profitable spinoff

In June 2015, FirstService (“FSV”) spun out the Colliers operations with shareholders receiving one Colliers International share for every FSV share held. Colliers continued providing commercial real estate services while FirstService’s focus remained residential property management. This proved to be a highly accretive exercise for shareholders as the share prices of both companies performed exceptionally well since the separation.

Hennick now serves as chairman of the Colliers board. He is also the CEO of the business and recently owned 4.3% of the subordinate voting shares and 100% of the multiple voting shares. Through the dual share class structure, he effectively controls the business with 43.8% of the total shareholder votes. We note that Mr. Hennick sold 851,000 shares between June 2017 and March 2018 which represents 38% of his holding of the subordinate voting shares while retaining 100% of the multiple voting shares. Staff members in total hold about 25% of the equity of the company.

An asset light business model

The company operates globally with the largest revenue contributions in 2017 from the U.S. (43%), Europe, Middle East and Africa (23%), Asia Pacific (19%) and Canada (13%). In 2017, the company

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Established in 1995, The Successful Investor Network has two businesses: an established group of renowned investment publications and a thriving Wealth Management service. The newsletters offer investors a range of investment styles, and the newsletters’ portfolios regularly top the market indexes. Our Wealth Management group, built on a conservative investment approach and low fee structure, oversees hundreds of millions of dollars for private clients. Pat McKeough, one of Canada’s most respected investment analysts and writers, is the founder and president of both companies.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: By Deon Vernooy, CFA, for TSI Wealth Network

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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