An appetite to expand their investment strategies and client base, along with a stronger local currency, have Canadian banks and money managers looking for acquisitions beyond their country's borders.
Previous acquisitions by Canadian banking giants Bank of Montreal, Royal Bank of Canada and Toronto-Dominion Bank involved non-Canadian money managers, and sources said they are again looking outside of the country for still further expansion.
In the past year, "there's been a lot of consolidation and acquisitions in the industry regarding Canadian independents; foreign, not so much," said Rebecca Cowdery, partner at the law firm of Borden Ladner Gervais LLP, Toronto. "But the chartered banks (BMO, RBC, TD Bank, Bank of Nova Scotia, Canadian Imperial Bank of Commerce) all are looking to expand."
Strategies now being sought by Canadian banks and money managers include alternatives, emerging markets equities and fixed income, credit and global equities, sources said.
In just over a month, two manager deals were announced involving Canadian firms: Toronto-based Bank of Nova Scotia announced it would buy Jarislowsky Fraser Ltd., a Montreal-based institutional money manager, for C$950 million ($737 million); and Montreal-based manager Fiera Capital Corp. said it planned to acquire credit and special situations manager Clearwater Capital Partners LLC, Hong Kong, for $21 million.
Those deals come after a 2017 that saw mostly domestic acquisitions, including Sun Life Financial Inc. buying the mutual fund assets of Excel Funds Management Inc., and CI Financial purchasing Sentry Investments Inc. All four companies are based in Toronto.
The recent acquisitions point to an unabated hunger among Canadian banks and money managers to add scale to their overall business and bring more investment strategies under their roofs, diversifying away from their traditional domestic securities investments.
Mark Chow, associate partner, Canadian head of manager research, at Aon Hewitt Investment Consulting, Toronto, agreed. "Asset management is attractive" to Canadian banks, Mr. Chow said. "Banks like their profile. It's just a matter of whether they want to spend the money to do it." Previous major deals — BMO acquiring London-based F&C Asset Management in 2014; Toronto-Dominion purchasing Epoch Investment Partners of New York in 2012; RBC buying Blue Bay Asset Management, also of London, in 2010 — "were intended to diversify the banks' asset management product lines," Mr. Chow said. "They went after expertise they couldn't find in Canada."
Spokesmen at the banks either could not be reached or had no comment.