ETF provider Purpose Investments to Include retail Resources

Exchange-traded capital provider Purpose Investments is expanding its product shelf after obtaining the retail assets of LOGiQ Asset Management Inc..

Goal has agreed to pay $32.9-million to buy LOGiQ’s retail asset management, which provides retail mutual funds, closed-end funds, hedge funds and pooled funds to Canadian investors.

The deal will see Purpose add about $1.3-billion in assets under management to the $3.4-billion in assets it manages in both mutual funds and exchange-traded funds.

The deal is expected to close in the end of December — subject to shareholder and regulatory approval.

LOGiQ launched last December following two renowned asset managers — Aston Hill Financial Inc. and Front Street Capital — chose to merge. Industry veteran Joe Canavan, former chief executive officer of Assante Wealth Management Ltd., was brought in as CEO to help salvage the two companies, each of which had plummeted in assets prior to the merger. (In the time of this deal, Aston’s assets had slipped to about $2.2-billion from a peak of $7.7-billion in 2014.)

Less than a year after, LOGiQ is departing the retail capital sector and will solely concentrate on its institutional worldwide sales business, Mr. Canavan said. (The institutional side of the company manages roughly $3.6-billion in assets)

With fee compression and the necessity to construct scale fast, Mr. Canavan says that he knew he had a brief period of time to construct a new asset manager with {}10-billion in assets under management.

Last week, Mr. Canavan had his eye on Sprott Inc.’s $3-billion mutual fund arm, but the deal never got off the table when Sprott chose to sell to its executives.

“You’ve got to grow larger to survive in this market, and the 1 thing which was really clear to me from the start was that I had to get assets — or look at another alternative,” Mr. Canavan said.

“The retail funds industry is undergoing large change and continuing consolidation. We think that as scale becomes crucial for retail fund managers, the advantages of a bigger platform like Purpose’s will translate into significant benefits for fund investors{}”

Consolidation is still rampant within the Canadian asset-management enterprise.

Last Friday, Sun Life Financial Inc. announced its purchase of Excel Funds Management Inc., most well known among investors because of its popular emerging-markets offerings; and earlier this summer, CI Financial Corp. struck a deal to obtain Sentry Investments Corp., valued at $780-million in stock and cash, merging two of the nation’s largest independent asset managers.

Goal was trying to strengthen its footprint in the Canadian investment industry. This past year, Purpose added into its fund lineup as it acquired Redwood Asset Management Inc., followed with a strategic partnership with OMERS Platform Investments, a branch of one of Canada’s biggest pension-fund providers.

OMERS announced a minority stake in Purpose Investments and while terms of the deal weren’t disclosed, it’s expected for OMERS to cultivate its stake in Purpose with time, although only as a minority shareholder.

“We’re trying to build out our busy money-management side of the company and we believed that [the deal with LOGiQ] was one which would help expand our investment offerings in addition to complement our present Redwood line up quite well,” said Som Seif, CEO and president of Goal in an interview with The Globe and Mail.

During the next few months, Mr. Seif will look to incorporate the finance offerings and better align the investment goods by making several improvements like lowering overall prices and introducing exchange traded fund classes of the acquired investment capital.

With files from Niall McGee and Joyita Sengupta

Courtesy: The Globe And Mail

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