PI Financial Corp. is selling itself for $100-million, extending a recent string of acquisitions in a hot market for independent asset managers.
Based in Vancouver, PI was founded in 1982 and was once known as Pacific International. Over 36 years its founders Max Meier and John Eymann have built the firm into a reputable money manager for retail investors in Western Canada, and the firm currently manages $4.5-billion worth of assets, while also operating a niche capital markets division.
The buyer, NG Holdings Canada Ltd., is a relatively new name to the Canadian asset management scene. NG is run by Gary Ng, who is 34 years old and who used to be a retail adviser at Union Securities, which PI acquired in 2012. At the time of that deal, Mr. Ng decided to venture out on his own and build a new firm. Six years later, he is acquiring PI.
Mr. Ng’s purchase, announced late Monday, comes as Canada’s independent money managers, or those that are not owned by a bank, see a growing appetite for their businesses. Canadian banks in particular are seeking acquisitions in order to compete with the biggest global providers of exchange-traded funds, such as BlackRock Inc., which can spread their fixed expenses over trillions of dollars in assets. In turn, these asset managers are able to charge extremely low fund fees.
The recent fervour has seen independents such as MD Management, Jarislowsky Fraser Ltd. and Greystone Managed Investments Inc. scooped up by Canadian banks. Last week, Calgary-based Mawer Investment Management Ltd., which oversees $50-billion of client money, said it has hired bankers to consider a sale.
Unlike the latest deals, however, PI will remain an independent firm. While scale is necessary to compete in the current market, Mr. Ng said in an interview that PI’s founders have been acquirers for a number of years, giving the firm the heft necessary to invest in technology that makes it more efficient and to absorb growing compliance and regulatory costs.
“One of the primary reasons I purchased PI is because of the scale that existed already," he said.
The plan now is to keep bulking up. Earlier this year Mr. Ng became a majority owner of the Rothenberg Group of Companies, which is an independent financial services broker based in Montreal, and he has been looking to “roll-up,” or acquire, other smaller asset managers.
Typically this strategy takes time to deploy, but the PI deal gives Mr. Ng a significant boost. “He’s realized hiring one broker at a time isn’t going to get him to our size," Mr. Meier, one of PI’s co-founders, said in an interview.
Mr. Ng approached PI this summer, and the deal came together quickly. Both Mr. Meier and fellow co-founder Mr. Eymann were impressed by Mr. Ng’s vision and entrepreneurial drive, and crucially, Mr. Meier said, “he’s willing to invest in the business.”
Once the acquisition closes, PI will be run by Jean-Paul Bachellerie, who is currently the firm’s president and has been the architect of PI’s recent acquisition strategy. Mr. Ng will serve as chairman.
At the moment, PI is largely focused on Western Canada, with roughly 50 per cent of its business coming from Vancouver, Mr. Meier said.
Stay up to date on all our Streetwise stories. We have a Streetwise newsletter, covering mergers and acquisitions, plus financial services news. It is sent Tuesday to Saturday morning. Sign up today.