Ben Cheng, president and CIO of Aston Hill Financial. Connor Clark & Lunn Financial Group Ltd. is selling its structured products business to Aston Hill for $20.5-million in cash proceeds.Charla Jones/The Globe and Mail
Privately-owned asset manager Connor Clark & Lunn Financial Group Ltd. wants to put more emphasis on its institutional business, so it is parting way with a division that sells closed-end funds.
CC&L is selling its structured products business to fellow money manager Aston Hill Financial Inc. for $20.5-million in cash proceeds. The figure isn't enormous, but the move underscores the broader trend of asset managers looking to invest more resources in their institutional efforts.
It is a theme that has been recently echoed by other wealth management groups, including the Bank of Nova Scotia and Michael Lee-Chin's Mandeville Holdings Inc.
With the proceeds, CC&L is going to invest in its illiquid alternatives business, which includes private equity, real estate, infrastructure and renewable power generation investments. It expects to redeploy the capital alongside client investments in those products.
Another reason CC&L wants to offload the closed-ended fund unit is to increase distribution of its own products, rather than distributing products managed by others. "This is the only part of our business where we would have ever distributed products not managed by one of our investment managers," said Warren Stoddart, co-chief executive officer at CC&L. "It is, almost exclusively by this point, products managed by folks other than ourselves, and it was different from the rest of our business."
CC&L is one of a few private asset managers left in Canada with about $46-billion in assets under management, and the portion of the business being sold accounted for 3 per cent of assets.
The acquirer picked up seven closed-ended funds belonging to Brompton Corp. back in 2011, so Aston has experience with this type of transaction.
Consolidation rumours run rampant around the smaller, independent asset managers, but CC&L maintains that this transaction does not indicate a move to sell out.
The firm has offices across Canada, in London and recently added a small sales team in New York. The deal is expected to close in mid-August pending regulatory approval.
(Jacqueline Nelson is a Globe and Mail Financial Services Reporter.)
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