GMP Capital Inc.’s (GMP.TO) deal with Stifel Financial Corp. (SF.N) will eventually yield a “pure play” Canadian wealth manager that aims to double its assets over time.
GMP Capital will use proceeds from the $70 million sale of its capital markets unit to Stifel and $198 million of working capital to invest in wealth management. The plan, if approved, includes acquiring the two-thirds of the Richardson GMP money manager it doesn’t already own from its advisers and James Richardson & Sons Ltd. of Winnipeg, Manitoba.
“What this will create is a pure play in wealth management and Richardson GMP will be the centerpiece of that,” Richardson GMP Chief Executive Officer Andrew Marsh said Monday in a phone interview. “But we want to use the public currency and the capital that we have, which is significant, to expand and offer Canadian households an independent alternative to a wide array of financial services.”
Canada has few independent money managers and even fewer that are publicly traded. Montreal-based Fiera Capital Corp., Toronto-based CI Financial Corp. and AGF Management Ltd. are among non-bank owned financial firms with wealth operations. Onex Corp., Canada’s biggest private-equity firm, agreed in March to acquire Gluskin Sheff & Associates Inc. for $445 million.
“It is hard to find a pure-play wealth-management firm like we will be, with the caliber that we represent,” Marsh said.
Large Canadian banks have been buyers of money managers to expand in wealth and asset management. Last year, Toronto-Dominion Bank bought Greystone Capital Management, while Bank of Nova Scotia spent about $3.54 billion to buy MD Financial Management and Montreal-based Jarislowsky Fraser Ltd. Two years earlier, Raymond James Financial Inc. bought Montreal-based MacDougall MacDougall & MacTier Inc. as part of a Canadian expansion.
Richardson GMP has about $30 billion in assets and the Toronto-based firm under Marsh has spent the past couple years rebranding and preparing to expand. GMP’s deal with Stifel advances those plans.
“We have set the stage purposefully for this moment, which we now can leverage and move into an aggressive growth mode by having access to that capital, but also the public currency, to go on an aggressive expansion campaign either by recruiting advisers or acquiring businesses that fit our long-term vision,” Marsh said.
GMP Capital Chairman Don Wright said in a separate interview that he’d like to see assets grow to $50 billion to $75 billion “over time.”
“We’ll do it when we do it in a disciplined way, but we see a massive opportunity,” Marsh said. “We believe that we can acquire some great advisers in the coming years and we also will be opportunistic for acquisitions as they surface.”