More bidders circling Richardson GMP

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Winnipeg's Richardson family is expected to exit its latest foray into financial services with another tidy profit, as bidders line up for one of Canada's largest independent investment managers, Richardson GMP Ltd.

However, just who will win control of a franchise with $27-billion of assets under management and 900 employees remains to be seen, as the company's two other shareholders – its employees and investment dealer GMP Capital Inc. – are using the sale process to set a price for their own potential offer.

GMP Capital entered the investment-adviser business in 2005 and its management team has repeatedly stressed the strategic importance of a division that generates steady fee income, and can distribute equity and fixed income offerings from the parent investment bank.

At least three other potential buyers are circling, The Globe and Mail reported Tuesday. Toronto-Dominion Bank and U.S. financial institutions Wells Fargo & Co. and Raymond James Financial Inc. have made preliminary bids, according to people familiar with the matter. Analysts have estimated that Richardson GMP could fetch more than $500-million.

While none of the firms have commented on a potential transaction, GMP Capital said Tuesday in a news release: "The Richardson GMP shareholders agreement contains a shareholder liquidity mechanism which could result in a transaction."

That liquidity mechanism includes a provision that allows each of the three shareholders to sell its stake after November, 2016, and Bay Street sources say the ownership group wants to have the company's future decided ahead of that deadline. The liquidity mechanism sets out a process for the partners to buy out each other, and part of that process is establishing a price for the company by holding an auction.

TD Bank CEO Bharat Masrani made it clear Wednesday that he is interested in making deals, telling an investor conference in Toronto: "We will look at any acquisitions in Canada very seriously because there are not many that are ever available." Mr. Masrani told a financial conference that TD is also considering further acquisitions in the southeast United States, and buying credit card portfolios.

Richardson GMP was created in 2009, when GMP Capital married up its wealth management arm with Winnipeg-based Richardson Partners Financial. GMP and Richardson Partners each own approximately 30 per cent, with the firm's retail advisers owning the remaining 40 per cent.

A source working with all three groups says the only shareholder that has decided to exit is Richardson Partners, and that the family-controlled company stands to make a significant profit on its investment. If Richardson Partners does opt to sell, it would be consistent with the family's history of building, then selling, financial institutions, while consistently building a grain and agri-food business that was started in 1857.

In 1996, the Richardson family sold Richardson Greenshields of Canada Ltd. to Royal Bank of Canada for $480-million, ending 70 years of ownership. At the time, vice chairman Royden Richardson said the decision was "bittersweet," but the future belonged to larger financial players. At the time, Mr. Richardson told The Globe: "The banks are very large and very powerful organizations in this country, and it's better for our group of people to be tied up in that."

Richardson GMP's investment advisers have conflicting goals in the auction process. Sources close to the company say the majority of brokers want to remain independent, but they also want to put the highest possible price on their stake in the firm.

Richardson GMP is considered a premium asset management franchise because the firm has focused on high-net-worth clients. Fees from wealthier clients are more lucrative and the overhead is lower than it is at mass-market firms with less affluent customers. Richardson GMP has the second-highest assets under administration per adviser in Canada, at $137-million, trailing only RBC.