Desjardins Group, North America’s largest financial services co-operative, agreed to acquire the assets of Canadian investment manager Hexavest Inc., adding C$5 billion ($4.1 billion) in institutional funds.
The purchase is in line with a the co-operative’s growth goal of targeting C$100 billion in assets under management by 2024, Nicolas Richard, president and chief operating officer of Desjardins Global Asset Management, said in a statement. The Quebec-based asset manager had C$83 billion in assets under management as of the end of March.
In Hexavest, Desjardins gets a Montreal-based firm with about 50 clients, mostly institutional investors in Asia, Australia, the U.S. and Canada. Terms of the deal, which is expected to close around Sept. 1, weren’t disclosed.
The deal comes three months after Hexavest said it ended an eight-year partnership with Eaton Vance Corp., the global money manager recently acquired by Morgan Stanley. Eaton Vance had owned 49% of Hexavest and helped it sell services outside Canada. A holding company controlled by Hexavest employees bought out the stake in February.
Hexavest’s performance has lagged benchmarks after a couple of difficult years. An all-country equities strategy returned 7.1% annualized over the five years ended March 31, trailing the MSCI ACWI Index by more than five percentage points, according to documents on the firm’s website. A Hexavest emerging markets fund did better, returning 10.8% annualized in the same period, slightly behind the MSCI Emerging Markets Index.
y“This transaction also allows us to consolidate Montreal’s position as an asset management hub,” Desjardins Chief Executive Officer Guy Cormier said in the statement.
