Investment manager Guardian Capital Group Ltd. GCG-T is expanding its U.S. footprint with the US$70-million purchase of North Carolina-based Sterling Capital Management LLC, a deal that will nearly triple Guardian’s assets under management.
On Friday, Guardian announced its wholly owned subsidiary Guardian Capital LLC has entered into an agreement to acquire 100 per cent of Sterling Capital Management from U.S-based Truist Financial Corp.
Guardian chief executive officer George Mavroudis said in a statement the deal will “significantly enhance” the company’s overall scale as a global asset manager and position it for future growth.
“Sterling shares and complements our approach and values in addition to adding new capabilities and investment strategies that enhance our offering in the United States,” Mr. Mavroudis added.
The deal, which is expected to close in the second quarter of 2024, includes a cash payment of US$70-million, as well as future earn-out incentives, which are typically additional payments to the seller if the acquired company hits certain targets,
Founded in 1970, Sterling is an independent money manager with about US$76-billion in assets under management for both institutional and retail investors. The company currently has six investment teams with about 181 employees.
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After the close of the deal later this year, Guardian says its plans to operate Sterling as a stand-alone entity, led by it’s current team of executives.
Managing about $47.3-billion in assets, Guardian Capital has largely been focused on institutional clients, including pension funds, foundations and endowments. More recently, it has been expanding its asset management opportunities for retail investors – including launching exchange-traded funds in 2020.
And in 2022 – in a move that added $750-million of capital to the balance sheet for acquisitions – Guardian sold three of its financial advisory businesses to Desjardins: IDC Worldsource Insurance Network Inc., a life-insurance advisory business; mutual-fund dealer Worldsource Financial Management Inc.; and Worldsource Securities Inc., a securities licensed investment company.
At the time of the sale of the Worldsource operations, Mr. Mavroudis said he was aware of “the number of opportunities” to add to its existing asset-management business – both geographically and across different client segments.
Bank of Nova Scotia research analyst Phil Hardie said Friday’s acquisition will help boost the company’s asset management business, particularly given Sterling’s strong investment track record in its fixed-income-related mandates that contribute an estimated 80 per cent of total assets under management.
“Although no financial metrics were provided at this time, given the overall scale of the operation we believe the platform is profitable and will contribute to earnings,” Mr. Hardie wrote on Friday. “More importantly, we like the transaction given the significant scale it adds to Guardian’s U.S. investment capabilities and growth opportunities it can provide Guardian through its expanded U.S. client base.”
Clare O’Hara