Investment Capital Shifts to Pot & Blockchain as “Major'” Roadblocks Hampers Canadian Oil Sector

Bets on blockchain and pot are paying off for GMP Capital Inc., the Canadian investment bank that has moved beyond energy, where it sees “major” roadblocks for investment.

Chief Executive Officer Harris Fricker said his Toronto-based firm is “on the right path” by diversifying beyond energy and resources into cannabis and new areas of technology. GMP’s first-quarter earnings proved his point, with investment-banking revenue nearly doubling to C$30.2 million ($23.5 million).

“Leading the way in investment banking was significant client engagement from our cannabis and blockchain franchises,” Fricker said Thursday in a statement after the firm posted first-quarter results. “An explicit element of our strategic agenda has been to diversify and further strengthen the non-commodities portion of our franchise and, we believe, our result this quarter evidences we are on the right path.”

GMP posted a profit of C$4.1 million, up 17 percent from a year ago, led by investment banking. Fricker said during an earnings call that he sees a “fairly constructive” market for investment banking for most industries with one exception — energy.

“In energy, a lack of hard timelines and a regulatory process that has been subject to dithering and near endless legal challenges will continue to be the major stumbling block for domestic and international investor confidence,” Fricker said.

Fricker’s comments come a month after Kinder Morgan Inc. halted most of its work on its Trans Mountain pipeline expansion amid opposition from British Columbia’s provincial government, indigenous and environmental groups. Efforts by energy producers to get oil and gas out of Alberta’s land-locked oil sands have been stymied by public opposition, legal challenges and political wrangling, hampering pipeline plans such as TransCanada Corp.’s Energy East and Enbridge Inc.’s Northern Gateway.

“International capital has little confidence that large-scale projects can be completed in Canada,” Fricker said, adding that “the pain is largely self-inflicted.”