Paul Desmarais III, Sagard chair and chief executive officer, in January, 2020.Christopher Katsarov/The Globe and Mail
Sagard Holdings Inc. is buying Swiss boutique asset manager Unigestion’s private-equity business, expanding its reach in a fast-changing market for private assets that is courting a new wave of wealthy individual investors.
Montreal-based Sagard, an alternative asset manager and subsidiary of the Desmarais family’s Power Corp. of Canada POW-T, is merging Unigestion’s private equity manager with its own, adding US$12.5-billion of private equity assets.
The combined US$23-billion private equity business will focus on investments in funds and co-investment with fund partners, as well as the burgeoning secondary market for buying and selling stakes in existing funds.
Unigestion’s non-private-equity businesses are not part of the deal. The companies did not disclose the deal’s financial terms, but it is Sagard’s largest acquisition yet.
“It gives us globally relevant scale,” Sagard chair and chief executive officer Paul Desmarais III said in an interview. “This industry is reaching a kind of maturity, and so consolidation in the space has just accelerated so much.”
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Sagard is moving quickly to claim its place in a private-equity market in which smaller players are struggling to keep up and wealthy retail investors are expected to pour new money into private investments.
After the Unigestion deal closes – likely early next year – Sagard will have more than US$44-billion of assets under management, with funds that also span venture capital, private credit, real estate and wealth management.
Five years ago, Sagard managed US$6-billion of assets.
The company has leaned into acquisitions to fuel its expansion. Sagard has done three transactions this year, and expects “to rinse and repeat next year,” Mr. Demarais said, with a target to reach US$100-billion of assets by 2029.
Sagard will still make traditional private-equity investments through its own funds that buy control of individual businesses to improve them. But it is moving increasingly toward investing clients’ money in third-party funds and making co-investments with those funds.
It is also planning to trade more in the secondary market for stakes in private-equity funds, as cash-strapped investors look to raise cash by selling off pieces of their illiquid portfolios.
“We become a solution to other investors and funds that are looking for liquidity, and that’s a very fast-growing business and it’s one of the business lines that we are most excited about,” Mr. Desmarais said.
Sagard managing partner Jonathan Tétrault will lead the private equity solutions business as CEO, and Unigestion’s Christophe de Dardel and Mark Zünd will stay on and continue to manage its assets.
Unigestion group chairman Bernard Sabrier will chair the new private-equity platform and join Sagard’s board as vice-chairman.
Sagard bought a stake in U.S. private-equity firm Performance Equity Management in 2023, and a large stake in secondaries investment firm BEX Capital earlier this year.
Adding Unigestion’s private-equity business gives Sagard a similar beachhead in Europe as well its first presence in Asia through a Singapore office.
The push to open alternative assets to more individual investors is in its infancy, and has been slower to gain traction than many asset managers anticipated.
“Nobody wakes up in the morning and says, ‘God, I really need a private credit fund,” Mr. Desmarais said. “And, so, it’s a big education process.”
But if the move pans out, asset managers could tap a huge new source of capital. And Mr. Desmarais said Sagard’s emerging focus on fund-based private-equity solutions is a natural fit when building products for wealthy retail investors.
“You end up with much more diversification,” he said. “It’s a much more suitable product for someone who’s like, ‘Hey, I need help building private equity exposure. Can you be my one-stop shop?’”
The race is on among asset managers to strike partnerships with wealth managers that can distribute their products to broad networks of retail investors.
Earlier this month, Sagard announced a distribution partnership with U.S.-based private wealth manager Baird, after bringing on Bank of Montreal as a minority investor last year.
“We’re at the beginning, but … shelf space is getting full,” Mr. Desmarais said.