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Banks aren't the only companies chasing asset managers.

Consistent with its strategy to beef up its asset management arm, insurer Industrial Alliance is scooping up Jovian Capital, a holding company that owns stakes in a number of small asset managers, for $94-million. The deal adds roughly $7-billion of assets to the insurer's existing $45-billion portfolio.

Like many of its Canadian peers, Industrial Alliance has been trying to diversify its revenue mix. In this era of low interest rates, insurers are having a hard time proving that their current market returns will ultimately allow them to pay out their long-term liabilities, so they're branching out into areas such as wealth management.

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At first glance, Jovian may seem like a bit of an odd choice. The company hasn't produced positive cash flow in the past few years, and it posted a $7.5-million loss from continuing operations in 2012.

Plus, last year some shareholders were outraged after Jovian's management team cut themselves a $12-million compensation cheque amidst the weak performance. Shareholders wanted this cash for themselves.

However, it appears there's a way for Jovian to become profitable under Industrial's umbrella.

"To the extent IAG can eliminate holding company costs (primarily holding company management compensation and administrative expenses), it will start from a baseline of positive earnings before interest, taxes, depreciation and amortization," noted National Bank Financial analyst Peter Routledge, adding that backend synergies will also help.

Provided the integration goes through without too many hiccups, investors should expect more deals of this sort from the insurer. The company has made it clear it wants to add more tuck-in acquisitions of this sort over the next few years.

(Tim Kiladze is a Globe and Mail banking reporter.)

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