Richardson GMP Ltd., the partnership between GMP Capital Inc. and James Richardson & Sons Ltd., said assets under administration may exceed C$30 billion ($29 billion) after its takeover of Macquarie Group Ltd.’s Canadian private-wealth business.
“We can easily clear C$30 billion” within 18 months, Richardson GMP Chief Executive Officer Andrew Marsh said today in a telephone interview from Toronto.
Richardson GMP agreed yesterday to buy Macquarie Private Wealth Canada for C$132 million to expand its wealth-management partnership. The transaction, expected to be completed in the fourth quarter, will raise the firm’s assets under administration to C$28 billion, from C$15.1 billion today.
“At C$28 billion, we have a meaningful stake and position in the Canadian industry,” Marsh said.
GMP Capital rose 6 percent today to C$6.40 in Toronto, the most since July 3. Winnipeg, Manitoba-based James Richardson & Sons is closely held.
Macquarie approached Richardson GMP to discuss a possible sale in late May, Marsh said.
“There’s such a scarcity of opportunities to consolidate a firm like Macquarie Private Wealth Canada,” Marsh said. “So to that extent, going from C$15 billion to C$28 billion, you have to look at that opportunity.”
Macquarie Private Wealth was created in January 2010 after its Sydney-based parent purchased Blackmont Capital from CI Financial Corp. Under CEO Earl Evans, the firm had a goal of 225 to 250 advisers in Canada and about C$25 billion in assets under management by the end of 2014.
The unit is being sold with more than 185 adviser teams in 12 offices in Canada, and C$12.9 billion of assets under administration, Macquarie said yesterday in a statement.
Richardson GMP will sell C$90 million of stock to pay for the takeover, the firm said yesterday. The rest will be financed with a bridge loan from Macquarie, Marsh said.
DBRS Ltd., the Toronto-based rating company, said today in a statement that it’s keeping the rating of GMP’s preferred shares unchanged at Pfd-3 (low) with a negative trend, even as the Macquarie assets will improve Richardson GMP’s profitability.
“DBRS views the private-wealth business as a diversifying influence in GMP’s profitability profile, but this acquisition does not overcome the fundamental capital market weakness challenges, which are the primary reasons for the existing negative trend,” the company said.
Richardson GMP will integrate Macquarie’s operations with its 14 Canadian offices and 116 adviser teams while also expanding through additional hiring, Marsh said.
“Over the next three years we can deliver really strong financial results through our efforts, and making sure we’re disciplined in running the business, but also grow,” Marsh said. “We’ve become a very attractive platform for recruits to look at a high-quality, independent alternative to the banks.”