Canada’s banks have shown a tremendous appetite to buy money managers of late, but the chief executive officer of Montreal-based Fiera Capital Corp. says his firm would make a tricky takeover target.
Canada’s third-largest independent asset manager says suitors have the company in their sights but that buying Fiera is complicated by several things including its relationship with two Quebec-based financial institutions and the risk of a blowback by those institutions to the prospect of an out-of-province buyer.
“We’re on the radar screen of just about everybody,” said Jean-Guy Desjardins, who founded the firm in 2003 and leads it as chairman and chief executive. “[But] Fiera Capital is a tough one to take over.”
Canadian banks have been stepping up acquisitions of wealth management firms for a number of years as their lending boom cools and they chase the next major profit driver. Last year alone, Bank of Nova Scotia bought Montreal-based Jarislowsky Fraser Ltd. and MD Financial while Toronto Dominion Bank bought Greystone Capital Management.
Mr. Desjardins declined to say whether he’d received approaches by interested buyers, but he believes Fiera presents some unique hurdles to getting a deal done.
The firm manages about $25-billion for Montreal-based National Bank of Canada, which is a shareholder in Fiera. It manages another roughly $4.5-billion for Lévis, Que.-based Desjardins Group, which is also a shareholder.
Those strong relationships would be “an element of resistance” for another large Canadian bank in a highly competitive market, Mr. Desjardins said. He spoke in an interview after the company’s annual meeting on Thursday.
The prospect of Fiera’s head office decamping to Toronto or elsewhere outside Quebec in the event of a takeover could also be problematic for National and Desjardins, Mr. Desjardins said. He noted Fiera is the only Quebec-based global investment management company of any major scale.
“You see the political aspect to that? It’s not an issue for us. We’re purely Canadian. As individuals, it’s not an issue for the guys at National or Desjardins for that matter; they’re business people. But being Quebec institutions, that’s another obstacle,” Mr. Desjardins said. “It’s a tricky one.”
Jarislowsky Fraser, however, is based in Montreal, and Bank of Nova Scotia had no issues with its recent acquisition.
Mr. Desjardins is executing a growth plan for publicly traded Fiera that aims to boost assets under management by 72 per cent to $250-billion from the current $145-billion by 2022. He said that while the firm will slow down acquisitions over the coming months, the goal remains intact.
After leading Fiera for 16 years, Mr. Desjardins is also preparing for a personal slowdown at the firm. He said he will probably cede the CEO reins to one of three internal candidates and become executive chairman by the end of next year “as long as everything goes well, from a macro point of view as well as the business itself."
French bank Natixis took an 11-per-cent stake in Fiera earlier this month for about $128-million, buying a block of shares unloaded by National Bank. Natixis also has an option to buy more shares held by Mr. Desjardins in the future. The CEO owns about 11 per cent of Fiera.
The deal, which the two companies called a “long-term strategic partnership,” includes a distribution agreement that gives Fiera access to Natixis’s investment strategies and products. Executives with National insist the sale was driven by balance-sheet considerations and that the commercial partnership with Fiera remains a strong one.
Holding Fiera shares “was not strategic at this point,” Martin Gagnon, National’s executive vice-president of wealth management, said on the bank’s quarterly earnings call Thursday. There are currently no plans to sell more Fiera shares, but the bank might reduce its position “from time to time going forward,” he said.