September 10, 2013 / 3:00 PM / 5 years ago

Richardson GMP eyes further growth beyond Macquarie deal

* Richardson GMP aim to increase assets under management with Macquarie deal

* Deal positions firm to compete better against banks

* GMP Capital shares up 9 pct in early trading on TSX

By Euan Rocha

TORONTO, Sept 10 (Reuters) - Richardson GMP aims to increase its assets under management to over C$30 billion ($28.9 billion) after the acquisition of Macquarie Group’s Canadian retail business, the wealth management firm’s head Andrew Marsh said on Tuesday.

Richardson GMP, in which financial services firm GMP Capital owns a non-controlling ownership interest, said late on Monday that it plans to buy Macquarie Private Wealth for about C$132 million ($127.3 million).

The deal, which is subject to regulatory approval, will make it the largest independent wealth management firm in Canada, well ahead of rivals like Raymond James and Canaccord Genuity.

“Our goal is to have well over C$30 billion in assets under management in the next 18 months,” Marsh, Richardson GMP’s Chief Executive, told Reuters in an interview.

Macquarie Private Wealth Canada has more than 185 teams of advisors in 12 Canadian offices with C$12.9 billion of assets under management. The combined firm will have about C$28 billion in assets under management.

Macquarie bought the private wealth business in 2009, via its C$93.3 million takeover of Blackmont from CI Financial . At the time, the business had roughly C$7.6 billion in assets under management and a team of 130 advisers in Canada.

Macquarie’s decision to sell highlights the challenges faced by independent dealers as banks bulk up their asset and wealth management businesses.

The increased competition, coupled with rising costs for technology and compliance, have made it much more important for independent dealers to gain scale.

“This puts us well ahead of where we thought we needed to be in order to achieve scale,” Marsh said, noting that Richardson’s cash flow generation and profitability had climbed as its assets under management grew to from C$12 billion to C$15 billion.

“The scale we now gain will generate very strong cash flows and earnings,” he added.

The deal is expected to close in the fourth quarter of 2013.

Macquarie, which also has institutional equities, corporate advisory, asset finance and other businesses in Canada, said the sale will not impact its other Canadian businesses.

Shares of GMP Capital rose 9 percent to C$6.59 on the Toronto Stock Exchange on Tuesday.

$1 = 1.0371 Canadian dollars Reporting by Euan Rocha; Editing by Janet Guttsman and Marguerita Choy

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