Montreal-based Innocap Investment Management Inc., is acquiring a majority stake in investment manager HedgeMark from BNY Mellon, in a deal that will grow the company’s assets under management to more than US$50-billion.
Founded in 1996, Innocap helps pension funds and other institutional investors get exposure to alternative assets such as hedge funds, infrastructure and credit. Innocap creates specialized investment vehicles for its clients and holds the assets, while giving its clients the power to monitor and control them.
Innocap and HedgeMark are major players in what is known as the managed accounts industry, which allows institutional backers to invest in assets without being in the same pool as smaller players, which may have different objectives.
Innocap CEO François Rivard told The Globe and Mail that BNY Mellon saw a better trajectory for HedgeMark if it was “extracted” from the U.S. bank. Innocap, which has about US$11-billion in assets under management, paid an undisclosed amount of cash and its own stock for HedgeMark, which has about US$40-billion in assets under management.
BNY Mellon will keep a minority stake in HedgeMark, joining pension giant Caisse de dépôt et placement du Québec and French bank BNP Paribas as shareholders of Innocap. Innocap announced in a press release that Quebec-based asset managers Fonds de solidarité FTQ and Walter Global Asset Management have also become Innocap shareholders.
“They have scale, we have agility,” Mr. Rivard said of the business combination. Innocap will work alongside the HedgeMark team to provide more investment services to clients. Innocap will have 300 employees after the deal closes.
“You’ve got the best people in the industry from HedgeMark, the best people from the industry from Innocap,” he said. “There’s not a whole lot of things that we haven’t seen if you combine our collective knowledge of this industry.”
Mr. Rivard said he takes inspiration from Amazon Inc.’s growth story, and wants to take a similar path with Innocap.
As Amazon built its business it transformed the consumption patterns of consumers, he said. “As we build this leader platform globally, we have the best process, best people, best protocols. … We can eliminate any of the objections that people have when they go through platforms” to invest in alternative assets.
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Jaren Kerr