Fiera Capital Corp. is acquiring a U.S. money manager, in order to focus on growing in a competitive market.
The Montreal-based investment firm said Wednesday that it would acquire New York-based asset manager Samson Capital Advisors LLC for about $33.5-million (U.S.) from a group of four private owners.
Samson is a boutique firm focused on global fixed income and currency investments in the U.S. with $7.6-billion in assets under management.
Jean-Guy Desjardins, the asset management entrepreneur and chief executive of Fiera, has had his sights set on the U.S. for some time now. He has been pursuing an acquisition large enough for Fiera to compete across all of North America. The deal for Samson will bring Fiera's total assets under management to more than $96-billion (Canadian) and extend its reach in the U.S.
This deal came came to Mr. Desjardins when Samson's chief executive Ben Thompson approached Fiera. The two firms were in talks for more than a year before agreeing to the merger.
This deal gives Fiera access to more high-net-worth clients, which have lately been particularly coveted by the investment industry. It also builds on Fiera's acquisition of New York-based asset manager Wilkinson O'Grady & Co. last year. The firm has expertise on the global equity side, balancing Samson's global currency and fixed income strategies, Mr. Desjardins said. He added that the plan is to merge the two organizations and re-brand them under one name in a few months. Mr. Thompson will lead Fiera's U.S. subsidiary.
Several other Canadian financial groups have also been acquiring, or planning to acquire, U.S. asset managers.
In late January, Royal Bank of Canada bought Los Angeles-based City National Corp. for $5.4-billion (U.S.), a significant driver of which is the bank's wealth management business. Sun Life Financial Inc. bought U.S. fixed income-focused asset manager Ryan Labs Inc. and others firms are also hunting for deals south of the border.
Mr. Desjardins isn't surprised by the competitive landscape because he believes having a broad North American presence will be essential for asset managers in the next decade. That's because the costs of operating a business such as rising salaries of investment managers, technology, regulatory requirements and compliance issues are all putting strain on businesses. There's also pressure to keep fees low. "In order to successfully operate an investment management company looking 10, 15, 20 years down the road, you will have to have scale," Mr. Desjardins said. "And Canadian scale isn't sufficient. You need North American scale."
But right now Fiera may be putting on the brakes on the acquisitions in the U.S. because of the drop in the Canadian dollar. "We will continue to work at making U.S. acquisitions, but our competitive ability from a pricing point of view will be handicapped by the fact that everything is 20 per cent more expensive now. We'll be adjusting our bidding process," Mr. Desjardins said, adding that Fiera will focus more on its Canadian business.
Nonetheless, if the right deal were to come along, Mr. Desjardins said he still has an appetite to expand in institutional asset management in the U.S.
Fiera said it plans to pay for Samson in $19.2-million of cash and $14.3-million voting shares. Other payments and employee retention incentives will be made over the next five years as financial targets are met.