Strategic expansion into Australia and Hong Kong

TORONTO, July 31, 2011 /PRNewswire/ – Canaccord Financial Inc. (“Canaccord”),
(TSX: CF) (AIM: CF.) is pleased to announce that it has formed a
partnership with BGF Equities (“BGF”) that will result in an expansion
of its operations into Australia and Hong Kong.

The partnership entails the acquisition of a 50% equity interest in BGF
Capital Group Pty Ltd (commonly known as BGF Equities), one of the
fastest growing boutique equities advisory firms in Australia, with 40
employees and offices in Melbourne, Sydney and Hong Kong. The
transaction is expected to close in the calendar fourth quarter, at
which point BGF Equities will be re-branded Canaccord BGF. The
agreement also provides Canaccord with a call option to acquire the
remaining 50% equity interest of BGF in five years.

This important expansion positions Canaccord well to leverage its
expertise in the mining, energy and industrial sectors within
Australia’s robust resource economy, and provides Canaccord with the
capabilities to list companies on the Australian and Hong Kong stock
exchanges.

The new combined business will benefit from Canaccord’s global
operations and distribution, and will provide an expanded offering of
investment banking, sales and trading, research and wealth management
services to corporate, institutional and private clients in the
Asia-Pacific region.

“We are pleased to welcome our new partners from BGF to Canaccord. The
addition of our new offices in Sydney, Melbourne, and Hong Kong, allows
us to better serve our clients with world class distribution
capabilities in five geographies and on nine exchanges,” notes Paul
Reynolds, President and CEO of Canaccord Financial Inc. “BGF has built
a strong, profitable business that represents an exceptional cultural,
strategic and accretive fit with our business.”

“We’re pleased to be adding Canaccord’s global capabilities to our
growing domestic business,” said Marcus Freeman, Managing Director of
BGF Equities. “Our combined capabilities will make Canaccord BGF a
significant competitor in the emerging company space and will benefit
greatly from the global distribution capabilities of Canaccord,” he
said.

On a pro-forma basis, the transaction is projected to be accretive to
Canaccord’s earnings.

ACQUISITION OF EQUITY INTEREST IN BGF:

Canaccord has agreed to purchase a 50% interest in BGF, for aggregate
consideration of approximately AUD$40 million, to be payable in cash
and, subject to TSX approval, Canaccord common shares. The number of
Canaccord common shares to be issued as partial consideration for the
purchase price (the “Consideration Shares”) will be calculated on the
basis of the volume-weighted average trading price for the 20
consecutive trading day period ending on the third trading day before
closing. However, the transaction is intended not to be dilutive;
Canaccord intends to purchase a like number of shares under its
outstanding normal course issuer bid and cancel them.

Completion of the equity investment is subject to a number of
conditions, including the receipt of regulatory and stock exchange
approvals. Canaccord anticipates that the acquisition will close in
the fourth quarter of calendar 2011 (during Canaccord’s third quarter
of fiscal 2012).

Canaccord has also been granted the option to purchase from the existing
shareholders the remaining 50% equity interest in Canaccord BGF. This
option will be exercisable, at Canaccord’s sole option, for a
three-month period commencing at the fifth anniversary of the initial
investment at a price to be determined at that time by reference to
Canaccord BGF profits.

In connection with its investment, Canaccord will have the right to
appoint three of the six directors of Canaccord BGF, and will have
customary approval rights with respect to certain fundamental matters.

The Consideration Shares will be held in escrow and will be released
rateably over five years.

Keefe, Bruyette & Woods Inc. acted as financial advisor to Canaccord on
the transaction. Mallesons Stephen Jaques in Melbourne and Goodmans
LLP in Toronto acted as legal advisor to Canaccord.

ABOUT CANACCORD FINANCIAL INC.:

Through its principal subsidiaries, Canaccord Financial Inc. is a
leading independent, full-service financial services firm, with
operations in two principal segments of the securities industry: wealth
management and global capital markets. Since its establishment in
1950, Canaccord has been driven by an unwavering commitment to building
lasting client relationships. We achieve this by generating value for
our individual, institutional and corporate clients through
comprehensive investment solutions, brokerage services and investment
banking services. Canaccord has 46 offices worldwide, including 32
Wealth Management offices located across Canada. Canaccord Genuity,
the international capital markets division, operates in the U.S., the
U.K., Canada, China and Barbados.

Canaccord Financial Inc. is publicly traded under the symbol CF on the
TSX and the symbol CF. on AIM, a market operated by the London Stock
Exchange. Canaccord’s Series A Preferred Shares are listed on the TSX
under the symbol CF.PR.A.

ABOUT BGF EQUITIES:

BGF Equities is an Australia-based, independent securities advisory firm
with offices in Melbourne, Sydney and Hong Kong. The company provides
full service investment banking, sales & trading, research and wealth
management services to clients in Australia, Asia and the UK. BGF’s
expertise and services are focused on emerging companies and it has
developed a proven track record of identifying high conviction
investment opportunities across the metals, mining, energy and
industrials sectors. Since the company’s launch in 2007, BGF Equities
has raised approximately AUD$640 million for its corporate clients.

BGF Equities is the operating division and trade name of BGF Capital
Group Pty Ltd.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This press release contains certain forward-looking statements,
including statements regarding Canaccord’s expectation that its
investment will be accretive to earnings. These statements relate to
future events or future performance and reflect management’s
expectations or beliefs regarding future events including business and
economic conditions and Canaccord’s growth, results of operations,
performance and business prospects and opportunities. Such
forward-looking statements reflect management’s current beliefs and are
based on information currently available to management. In some cases,
forward-looking statements can be identified by terminology such as
“may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”,
“estimate”, “predict”, “potential”, “continue”, “target”, “intend” or
the negative of these terms or other comparable terminology. By their
very nature, forward-looking statements involve inherent risks and
uncertainties, both general and specific, and a number of factors could
cause actual events or results to differ materially from the results
discussed in the forward-looking statements. In evaluating these
statements, readers should specifically consider various factors that
may cause actual results to differ materially from any forward-looking
statement. These factors include, but are not limited to, the risk that
the transaction described herein does not close, market and general
economic conditions, the nature of the financial services industry and
the risks and uncertainties detailed from time to time in Canaccord’s
interim and annual consolidated financial statements and its Annual
Report and Annual Information Form filed on www.sedar.com. These
forward-looking statements are made as of the date of this document,
and will not be updated or revised, except as specifically required by
applicable law.

SOURCE Canaccord Financial Inc.