Canadian tycoon Paul Desmarai of Power Corporation of Canada died on October 8, 2013

Paul Desmarai (January 4, 1927 – October 8, 2013) was a high profile tycoon and empire-builder in Canada for many decades. According to Forbes, he was the 4th wealthiest person in Canada and the 235th wealthiest in the world with an estimated net worth of $4.4 billion. Demarai was born into a family with business interests in the Sudbury, Quebec region. This was a tough blue-collar nickle mining area similar to the Apalachian coal mining region in the USA back in the 1950s.

Paul Desmarai

Paul Desmarai

After completing his law degree, Desmarai worked briefly for an accounting firm before moving on to work for small ailing railroad and bus business, the Sudbury Copper Cliff Suburban Electric Railway Company, that ferried miners to and from work. The business had originally been started by his grandfather. Finally, as it teetered on the brink of collapse it was sold to Paul for a dollar who then quickly turned it around. This was the start of an impressive career of growth via acquisitions.

His next step was to use debt, leveraged buyouts, and reverse takeovers to build out Provincial Transport the largest inter-city bus company in Quebec and Ontario. Afterwards a bus drivers strike was the catalyst for Desmarai diversifying into the insurance business by acquiring Imperial Life Insurance one of Canada’s biggest insurance companies. He eventually acquired Power Corporation of Canada, a small Montreal electric company, which then became the flagship of his fleet. Think of Power Corporation as Desmarai’s equivalent of Warren Buffett’s Berkshire Hathaway.

Through the 1960s and ’70s Power Corporation went on a voracious acquisitions binge gobbling up companies in insurance, newspapers, pulp and paper manufacturers, mutual funds, steamships, and more.

The conglomerate generally left its acquisitions’ management and corporate identity intact. “He believed that we were owners, not managers,” Mr. Rae said. Indeed, Power Corporation maintains so low a profile that there is no sign identifying the company outside its headquarters in downtown Montreal. (source)

If you want to learn more about Paul Desmarai a good place to start is Peter C. Newman’s The Canadian Establishment which is all about Canadian tycoons. It’s an inspirational read.

4 Responses to Tycoon Paul Desmarai Dead at 86

  • Always looking to learn more about Tycoon’s. Looking forward to this read. How these guys used debt to build wealth, raises the hair on my back. :0)

    If you can structure a doable deal, you can do any deal.

  • Interesting fellow. He left his empire to two sons. Here is the Power Corporation of Canada site.

  • Where do you find companies that can be bought for $1? I read about this happening every now and then.

  • Neil,

    I first read the book by Newman around 1981 or so when it was a best seller up in Canada, so I don’t recall all the details. However, it’s a safe bet that Paul assumed the ailing company’s debts. That’s pretty well the case with all one dollar deals. The current management concludes that it won’t be able to pay off its debts. Then someone else comes along who sees a way out for the company and offers to buy it for a dollar plus assumption of the debt.

    By the way, for anyone interested in a framework for both conducting an analysis of a troubled company and carrying out a turnaround, I recommend this new book:
    Plan to Turn Your Company Around in 90 Days: How to Restore Positive Cash Flow and Profitability Paperback by Jonathan H. Lack.

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