Bloomberg News

Fiera Hunts Acquisitions as Stock Outperforms

October 17, 2012

Fiera Capital Corp. (FSZ), the best- performing wealth manager among its North American peers this year, is looking for acquisitions of companies with assets of up to C$2 billion ($2.04 billion), President and Chief Operating Officer Sylvain Brosseau said.

Fiera, which oversees about C$54 billion, has climbed 22 percent this year, the most among 11 North American investment managers with market values of C$100 million to C$1 billion, according to data compiled by Bloomberg.

“The fact that we have been in alternative asset management for a number of years has made us a player,” Brousseau said in a telephone interview from Montreal, where the firm is based. “We get a lot of calls from people wanting to sell their business, and right now are looking at deals both in Canada and the U.S.”

Fiera bought National Bank of Canada’s Natcan Investment unit in April for C$309.5 million and agreed this month to buy the Canadian wealth management unit of Societe Generale SA (GLE), giving it exposure in western Canada for the first time. Fiera invests in so-called “alternative” assets such as infrastructure and real estate.

Brosseau said many firms reach C$1 billion to C$2 billion in assets and then need to sell their operations in order to stay competitive. He didn’t identify specific acquisition targets.

“Most of them hit a growth wall when they get big,” he said. “This is really the sweet spot for us.”

‘Difficult Undertakings’

Wealth-management firms in Canada had assets of C$167.8 billion at the end of June, according to Investor Economics, a Toronto-based research firm. Canada’s six largest banks accounted for 46 percent of assets, Investor Economics said.

“While acquisitions in the industry are widely believed to be difficult undertakings, Fiera appears to be continually successful with its growth by acquisition strategy,” said Phil Hardie, an analyst at Scotiabank Global Banking and Markets in Toronto.

Michael Smedley, chief executive officer of Morgan Meighen & Associates, which runs about C$1 billion, said Jovian Capital Corp. (JOV) might be a potential target for Fiera.

“The first thing that comes to my head as a publicly traded company is Jovian,” Smedley said in an interview at Bloomberg’s Toronto office yesterday. “Jovian is intriguing.” Smedley doesn’t own Fiera shares.

Jovian had client assets of C$6.2 billion under management at June 30, and owns Leon Frazer Associates, which had C$1.9 billion under management. Don Sangster, a spokesman for Jovian, didn’t immediately respond to a voice mail message seeking comment yesterday.

Western Foothold

The Societe Generale purchase, scheduled to close by the end of the year, will add about 20 employees to Fiera’s current staff of about 230. It will be the company’s first foray into western Canada, where Fiera is targeting the oil-rich province of Alberta. Albertans had the highest per-capital income in Canada last year, said Brosseau.

“If they’re looking for a new platform for growth, private wealth makes a lot of sense,” said Brandon Snow, who manages the C$1.3 billion Cambridge Canadian Equity Fund at Cambridge Advisors in Toronto, which includes Fiera shares. “The Canadian wealth management acquisition is entirely consistent with what they’ve been doing.”

Organic Growth

Output in Alberta averaged C$67,756 per person in 2010, about 47 percent more than the Canadian average, Statistics Canada data show.

Fiera Chief Executive Officer Jean-Guy Desjardins said in April, following his purchase of Natcan, that the company plans to double its assets by 2016 “purely on an organic basis.”

The Natcan purchase gave Fiera access to National Bank’s distribution network, which included at the time 2,000 financial advisers and about 440 branches across Canada. National Bank is the country’s sixth-largest bank by assets.

Fiera declined 1 percent to C$7.65 at 9:43 a.m. today for a market value of C$434 million.

In the U.S., Fiera would like to add “emerging market assets capabilities, as well as global fixed income,” said Brosseau.

“That’s the focus of our strategic activities,” said Brosseau. “There’s a lot of activity on that front.”

To contact the reporters on this story: Frederic Tomesco in Montreal at tomesco@bloomberg.net; Sean B. Pasternak in Toronto at spasternak@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; David Scheer at dscheer@bloomberg.net


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