Fiera CEO Trawls U.S. for Emerging Market AssetsFrederic Tomesco
Fiera Capital Corp. Chairman and Chief Executive Officer Jean-Guy Desjardins can’t stop shopping in the U.S.
Less than eight months after completing the purchase of Los Angeles-based Bel Air Investment Advisors LLC and New York-based Wilkinson O’Grady & Co. for a combined $156.3 million, Desjardins is once again scouting for deals in the world’s biggest economy.
Fiera, Canada’s best-performing asset manager over the past five years, is willing to spend as much as C$200 million ($186 million) for a U.S. money manager with about $15 billion in assets that focuses on emerging markets, global fixed income or hedge funds, the CEO said.
“There are things we are looking at now, and some of them are at an advanced stage,” Desjardins said in a telephone interview from his office in Montreal, declining to name targets. “We have been working on this for several months, and something is likely going to get concluded in the next six months.”
U.S. expansion is part of Fiera’s drive to boost assets under management to C$150 billion in the next few years. Fiera oversaw C$80.4 billion as of the end of March, including almost C$50 billion in fixed-income. Hedge fund and other alternative investment strategies accounted for C$4.2 billion of assets.
Desjardins founded the company in 2003 after selling TAL Global Asset Management to Canadian Imperial Bank of Commerce.
“Theirs is a growth by acquisition story, and they have a track record of doing successful deals,” Christine Decarie, who holds Fiera shares as part of the C$250 million Quebec Enterprise Fund she manages for Investors Group in Montreal. “They are the typical consolidator. I’m positive on stock markets generally, and Fiera is the type of company that performs well when markets go up.”
Excluding banks, Fiera is the fourth-largest publicly traded mutual-fund manager in Canada with a market value of about C$863 million as of yesterday, according to Bloomberg data. IGM Financial Inc. of Winnipeg, Manitoba, tops the list with a value of C$12.6 billion, while Toronto-based CI Financial Corp. ranks second with a value of C$9.8 billion.
Fiera’s 131 percent advance over five years makes it the best performing of five independent Canadian asset managers, tracked by Bloomberg News. Since the start of the year, however, Fiera has declined 11 percent, exceeding the 0.7 percent average drop of Canadian asset managers.
“All of the asset managers have underperformed this year, probably because valuations were getting to be a little bit high,” Scott Chan, an analyst at Canaccord Genuity in Toronto, said in a telephone interview. “Perhaps part of the depressed stock price is due to the proximity of an acquisition. They are pretty close to an acquisition, and if they did one there would be an equity offering.”
Fiera is “in the market” to acquire a U.S. firm with as much as C$15 billion under management, Desjardins said, declining to say how he might finance a deal. That’s almost double the C$8.5 billion of assets that Bel Air and Wilkinson O’Grady contributed.
As of the end of March, Fiera had C$21.3 million of available cash.
“If you buy C$15 billion of assets, you could pay C$150 million to C$200 million,” Desjardins said. “More than that, it would be too big for our financial means. It’s always a function of the profitability of the firm.”
Emerging markets fund-management capabilities “are what we lack,” Desjardins said. “We also lack a strong base in alternative strategies. We have some hedge funds in-house, but there are thousands of hedge-fund strategies out there. If we saw someone with a track record and a strategy we’re comfortable with, we’d be interested for sure.”
Institutional and high-net worth asset managers are also of interest to Fiera, said Desjardins.
Managing assets for high-net worth individuals “offers great opportunities for an independent manager, especially in the U.S. because of its highly fragmented structure,” Desjardins said. “High net-worth people in the U.S. tend to be more critical and defensive relative to the large financial institutions than in Canada. For someone like us, that’s good.”
Given the work he’s put in on the acquisition front, Desjardins said he hasn’t had much time to fret over Fiera’s stock price. Not that he’s concerned.
Fiera declined 0.1 percent to C$12.67 at 9:42 a.m. today in Toronto while the benchmark Standard & Poor’s/TSX Composite Index advanced 0.2 percent.
“We haven’t seen any big institutional sellers,” Desjardins said of the decline in Fiera’s stock. “All I know is that if the company delivers on its goal to get to C$150 billion, the stock won’t stay where it is now. So I’m not preoccupied.”