Brookfield Asset Management Ltd.

and a private equity partner reached a friendly deal to take over

First National Financial Corp.

, a

mortgage

company backed by Canadian billionaire

Stephen Smith

, for about $2.9 billion.

Funds managed by Brookfield and Toronto-based Birch Hill Equity Partners Management Inc. agreed to pay $48 a share in cash for First National, an originator of commercial and residential mortgages. That’s a 13 per cent premium to where the shares closed Friday.

First National is controlled by Smith and Moray Tawse, who own 71 per cent of the company. They will sell about two-thirds of their holdings and roll the rest into the private company after the deal, according to a statement late Sunday.

Smith co-founded the firm, which has been a winner for investors, generating a total return of more than 415 per cent over the past 10 years, including dividends, according to data compiled by Bloomberg. Jason Ellis is expected to stay on as First National’s chief executive, the companies said.

First National’s main business is to originate primarily prime mortgages, working with independent brokers to find homebuyers in the single-family segment and funding the loans through institutional investors.

Bloomberg.com