Canadian Financier Stephen Smith Acquires Stake in The Economist

Stephen Smith, a Canadian billionaire, has purchased a 27% stake in The Economist, with the goal of ensuring Canadian representation in the globally influential publication. This investment highlights his long-standing appreciation for the journal and his commitment to independent journalism.

A Long-Held Admiration

Stephen Smith, a Canadian financier, has solidified his long-held admiration for The Economist by acquiring a substantial 27% stake in the publication. He has been a dedicated reader since his days as an engineering student at Queen’s University in the late 1960s. Mr. Smith playfully described the acquisition as acquiring a 'sports team for nerds,' emphasizing his passion for the publication’s intellectual rigor and global perspective.

Details of the Acquisition

The purchase was made through Smith Financial, his family’s holding company, and involved acquiring the stake from Lynn Forester de Rothschild, who had held it for 24 years. While the exact purchase price remains undisclosed, European media estimates place it around £300 million (approximately $550 million).

Motivations Behind the Investment

Mr. Smith’s decision to invest in The Economist stems from a desire to counterbalance the predominantly American ownership of many leading business publications, such as The New York Times and The Wall Street Journal. He believes that The Economist’s global outlook is crucial and that Canada should have a voice in the international discourse.

Securing the Deal

The Economist Group board prioritized shared values and support for independent journalism over simply the size of the investment, which was a key factor in securing the deal. The process involved a direct approach from Mr. Smith to Ms. Forester de Rothschild, followed by formal engagement with Barclays and Torys LLP.

Key Endorsement

A pivotal moment in the bidding process was an introduction facilitated by Chrystia Freeland, the former federal finance minister, who connected Mr. Smith with The Economist’s CEO, Lara Boro. Ms. Freeland’s endorsement proved instrumental in distinguishing Mr. Smith’s proposal from those of at least five other potential investors.

A Generational Investment

This investment is envisioned as a long-term, generational asset, with Mr. Smith’s children – both involved in the family’s financial ventures and his daughter, a lawyer and writer – expected to continue ownership of the media company. This ownership shift represents only the third significant structural change in The Economist Group’s 183-year existence.

The Economist's History

Founded in 1843 to champion free trade, the publication has evolved into a respected source of international news and analysis, boasting a subscriber base of 1.25 million. Previous ownership changes include Pearson plc’s acquisition of 50% in 1957 and the subsequent sale of most of that holding to the Agnelli family in 2015, alongside the sale of the Financial Times to Nikkei.

Stephen Smith's Background

Mr. Smith’s wealth originates from his success in the Canadian financial sector, particularly through First National, Canada Guaranty Mortgage Insurance, and Peloton Capital Management. These companies operate as strong competitors to traditional Canadian banks, focusing on providing mortgages to those underserved by conventional lenders.

Philanthropic Efforts

Beyond his business endeavors, Mr. Smith and his wife, Diane Blake, are active philanthropists, supporting organizations like Historica Canada, the Royal Ontario Museum, and The Walrus. His contributions to Queen’s University, including substantial donations to the faculties now known as Smith Engineering and the Smith School of Business, have been particularly noteworthy. Mr. Smith will also be joining the board of the Economist Group, affirming his commitment to the company’s strategy and its 1,500 employees worldwide.