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The hectic pace of acquisitions at Fiera Capital is going to slow, with growth over the next five years likely to come more from internal sources than the steady flow of purchases that have marked the past few years.
Fiera is celebrating its 10th year in business, a short span full of deals that have made Fiera the seventh-largest asset manager in Canada. The company runs funds for individuals and institutions such as pensions, as well as offering services for high net-worth individuals. Investors who have simply bought Fiera shares have also done very well, as the stock has been a strong performer relative to industry rivals.
Founder Jean-Guy Desjardins has set his sights for a long time on being what he calls a "North American" scale operator in wealth management, which means having the scale to compete all across the continent.
The last stretch has been about pulling together assets to create scale to enable Fiera to manage the costs of being in the money management business.
That goal also meant Montreal-based Fiera was seeking growth in the U.S., something it got with a recently closed acquisition of money-management firms in New York and Los Angeles.
Now that some of those strategic priorities have been accomplished, the number of purchases Fiera makes should decline, said Sylvain Brosseau, the president and chief operating officer of Fiera, and the man whose job it is to integrate newly purchased companies.
"It will be a slowdown from the recent pace," Mr. Brosseau said in an interview. "The last couple years have been quite intensive."
The purchases came because "the timing was right," he said, but now there will be a "greater shift toward organic growth."
Fiera's plan is to double in size over the next five years, from $75-billion of assets under management to $150-billion.
"That will give us the status of being a North American player," said Mr. Desjardins.
Of that, only about $20-billion is supposed to come from strategic acquisitions according to the Fiera strategic plan. The rest will come from growth in the businesses it already manages as well as increases of the market value of assets under management. That's based on an assumption that market value rises 5 per cent per year.
"If all these things come together, we'll get there," Mr. Desjardins said.
The focus is no longer also finding an acquisition in the U.S., something that had been a priority. Now, with a major foothold there, "organically, quite a bit of growth will be coming from the U.S.," Mr. Desjardins said.
"From a strategic point of view, we don't have a commitment to the U.S. or Canada on the acquisition side. The best opportunity will be the one to do."
The purchases that Fiera made in the U.S. earlier this month, a wealth management firm in Los Angeles and a fund management company in New York, cost almost $160-million (U.S.) and added $8.5-billion (Canadian) to Fiera's assets under management.
There were plenty of options to choose from, with a "long list" for sale, Mr. Desjardins said.
"When you put the flag up, you have all the bankers coming at you, it takes place very rapidly."
In Canada, there are still many firms that are smaller and will be looking to sell.
Companies that manage money for institutions but have less than $10-billion in assets under management "will be looking for marriages," said Mr. Desjardins. He said that is because they don't have the ability to increase their size easily. They are good managers of money, but they are dependent on a couple of investment strategies, or because they don't have the expertise on the business management side, he said.
"Most of the time when we are approached by one of those, they have a high degree of dependence on one or two strategies, and are sensitive to the vulnerability of their business."
If Fiera does indeed reach its goal of $150-billion of assets in five years, Fiera will have the ability to look further afield should it choose that option.
"I think that the senior management of the firm will also have at that point an option to globalize the operation, instead of having a North American scope," Mr. Desjardins said. "Maybe expand that to become a global wealth management organization, have a European or an Asian base."