The deal is expected to help IGM tap into the rapidly evolving Chinese asset management space. Credit: Li Yang on Unsplash.

Canadian asset manager IGM Financial is set to double its stake in China Asset Management Co (ChinaAMC) through its subsidiary Mackenzie Financial.

Mackenzie will acquire a 13.9% stake in ChinaAMC from Power Corporation of Canada (PCC) for $900.55m (C$1.15 billion) in cash.

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The deal would double Mackenzie’s holdings in the firm to 27.8%.

IGM will partially finance the transaction by divesting 15.2 million shares in Great-West Lifeco to PCC for a cash consideration of C$575m.

The remainder of the deal price will be paid using the firm’s existing financial resources, it said.

The transactions are expected to close in the first half of 2022.

Deal Rationale

ChinaAMC, which was founded in 1998, is a unit of PCC. It managed CAD$309bn in assets as of 30 June 2021.

The deal is expected to help IGM tap into the rapidly evolving Chinese asset management space and consolidate the ChinaAMC ownership position at Mackenzie while simplifying IGM and PCC organisation structure.

Furthermore, it is expected to create business opportunities between Mackenzie and ChinaAMC as Mackenzie looks to develop globally diversified and differentiated solutions for its clients and bolsters distribution opportunities in China.

IGM expects the deal to be accretive to its earnings in the first year of increased ownership.

Comments

IGM Financial president and CEO James O’Sullivan said: “We believe that an expanded investment in ChinaAMC – one of the top three asset managers in the country – is strategically important to position IGM Financial for further growth.”

Mackenzie Investments president and CEO Barry McInerney said: “Since our original acquisition of an interest in ChinaAMC in 2017, we have built sales relationships in excess of $1 billion between our two companies. We believe our increased investment in ChinaAMC and its market will amplify opportunities going forward.”