Fiera Capital Corp. is leaving the retail mutual fund industry as it aims to bolster its institutional and private wealth businesses.
Fiera Capital announced on Tuesday morning that Canoe Financial LP has agreed to acquire the rights to manage the Fiera Capital mutual fund family, which consists of nine funds and approximately $800-million in assets under management.
“This transaction will allow Fiera Capital to focus on its core strengths serving institutional markets and private wealth clients, as well as sub-advisory via strategic partnerships,” Jean-Philippe Lemay, president and chief operating officer of Fiera Capital’s Canadian Division, said in a statement.
“We don’t see this as an exit of the market but as a different way of penetrating the retail channel,” Mr. Lemay added in an interview. “Considering the direct distribution of retail strategies was fairly small in the grand scheme of Fiera, we really decided to find a partner that could distribute more effectively our strategies in the retail market; and that is what we found with Canoe.”
The sale comes on the heels of the firm announcing its new strategic plan to develop a stronger global brand among institutional clients.
Fiera Capital currently manages $143.5-billion in assets. Less than 1 per cent of that sits in the company’s retail fund market. (The price of the sale has not been disclosed.)
As the firm shifts away from the retail market, Fiera chief executive Jean-Guy Desjardins says the firm is still on track to reach a goal of $200-billion in assets by 2022, a target he publicly announced he was striving to achieve several years ago. The spike in assets would also propel the firm into the top 100 global asset managers.
Fiera is expected to close the Canoe deal during the first quarter of 2019.
Canoe, which manages $4.8-billion in assets in both mutual fund and private energy equity products, will acquire the following funds: Fiera Capital Diversified Bond Fund, Fiera Capital Income and Growth Fund, Fiera Capital High Income Fund, Fiera Capital Core Canadian Equity Fund, Fiera Capital Equity Growth Fund, Fiera Capital U.S. Equity Fund, Fiera Capital Global Equity Fund, Fiera Capital International Equity Fund and Fiera Capital Defensive Global Equity Fund.
Upon regulatory approval, Canoe will become the trustee and portfolio manager of the Fiera Capital mutual funds and all funds will undergo a name change to continue under the Canoe banner.
As part of the agreement, Canoe has agreed to retain Fiera Capital to act as sub-adviser for Fiera Capital Global Equity Fund, Fiera Capital Defensive Global Equity Fund, Fiera Capital International Equity Fund, and Fiera Capital Equity Growth Fund. There will be no change in the current portfolio management team for these four funds.
Fiera Capital will also maintain its existing relationships as sub-adviser to certain funds for Horizons ETFs Management (Canada) Inc. and National Bank of Canada.
Fiera Capital will continue to manage its Canadian closed-end funds as well as its alternative strategies including: Fiera Active Trading Fund, Fiera Long/Short Equity Fund, Fiera Market Neutral Equity Fund, Fiera Capital Income Opportunities Fund.
Mr. Desjardins, who will be inducted into the Investment Industry Hall of Fame later this week, continues to look at future acquisitions to accomplish his growth targets, and told The Globe and Mail in an interview that he is already reviewing about a dozen potential deals.
He will continue to place a significant commitment to expand the alternative strategies division within the next five years, a business unit led by John Valentini, executive vice-president and president of the private alternative investments division.
Earlier this year, the Montreal-based asset manager established roots in the Asian market after acquiring Clearwater Capital Partners LLC, an Asia-focused credit and special situations investment firm headquartered in Hong Kong. The deal added US$1.4-billion in assets under management to Fiera Capital’s Private Alternative Investments business.
Clare O’Hara