The Macquarie Group logo.DANIEL MUNOZ/Reuters
While bankers and wealth managers were at the lake this summer, Richardson GMP Ltd. was hammering out its deal for the Canadian Macquarie Private Wealth Inc. business.
The acquisition announced Monday will almost double Richardson GMP's assets under administration to $28-billion. The exit of another global player also cements 10-year-old Richardson GMP's status as the country's largest independent wealth management firm.
An executive from Australian parent Macquarie Group Ltd. contacted Richardson GMP in June to say that he wasn't sure whether the Canadian retail business fit into the company's long-term international plan, and the two companies discussed a merger.
"They wanted to work exclusively with us, because both being independent firms, there's a shared culture and entrepreneurial spirit," says Andrew Marsh, president and chief executive officer of Richardson GMP. There is also the opportunity to keep a door open in a relationship with Macquarie that wouldn't be feasible at a bank, he said.
Richardson GMP said in a statement Monday that it would sell new shares to raise $90-million for the acquisition, but the rest of the $128-million purchase price will come through a short-term bridge loan from Macquarie Bank. "We'll work to replace that with some new lenders," Mr. Marsh said.
It's not the first time an international firm has cut its stake in Canada (although Macquarie's capital markets business will not be effected by this deal). Merrill Lynch & Co. Inc. has made two unsuccessful retail brokerage forays into Canada in the past couple of decades, and HSBC Holdings PLC sold its Canadian brokerage to National Bank of Canada two years ago.
But with the backing of the wealthy Richardson family, an independent capital markets dealer and employee shareholders, Mr. Marsh said his firm is well positioned to take on the Canadian banks in the business of managing money for clients.
"Clients, especially wealthy families, appreciate the alternatives to large banks," he said. "As far as where it goes from here, I hope other independents get through this malaise of business conditions, but we're focused on the $28-billion [company] we're about to become."
Richardson GMP's takeover of Macquarie – and its greater assets under administration – could suggest some safety and stability to potential new employee recruits who may have been previously concerned about the firm's long-term prospects given the competitive environment.
Mr. Marsh is also keeping an eye out for other acquisitions, since mergers among the independent players can help to create economies of scale that may make them more competitive against the aggressive big banks' wide distribution networks.
But there's still a lot of work to be done. The integration of Macquarie's retail business is more complicated than changing marketing materials.
"We've got to spend some more time learning about each other," Mr. Marsh said.
The 2009 merger between GMP Private Client LP and Richardson Partners Financial Ltd. taught him the value of patience when two firms integrate and he's hoping to get that right on the Macquarie deal. "We need to fully understand the best and worst of each of our firms – because no firm is perfect."
(Jacqueline Nelson is a Globe and Mail Financial Services Reporter.)
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