Richardson GMP scoops up CQI Capital, plans relaunch of asset manager

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Financial advisory firm Richardson GMP Ltd. is set to launch an investment management division later this year after scooping up CQI Capital Management from parent company GMP Capital Inc.

CQI, an asset management firm which provided investment management products and services to high-net-worth individuals and institutional investors, was launched by GMP Capital in 2007. It originally operated under the name GMP Investment Management before being renamed in 2013.

While CQI wasn't a successful endeavour for GMP Capital, Richardson GMP sees it as a golden egg and will acquire the asset manager by year-end for a nominal amount, says Andrew Marsh, chief executive officer of Richardson GMP.

"This is an opportunity to gain access to really great money managers that are not available in Canada," says Mr. Marsh. "We will be able to provide these managers with one of the biggest independent distribution channels in Canada."

The acquisition is expected to reduce GMP's annual expenses by approximately $2.3 million going forward. In connection with the wind down of fund operations, GMP will receive a return of the capital it invested in CQI funds of $9.7 million, according to the company's quarterly earnings report.

CQI will then be re-launched as a third party asset manager with a strong focus on alternative investments. The funds will be third party products and offered to accredited investors only.

Mr. Marsh is already in discussions with several large money managers from the U.S and Europe who are looking to launch investment offerings to the Canadian marketplace.

"We have heard from a lot of really smart money managers telling us that they want to bring some great products to the Canadian marketplace but the banks won't let them on their platform," says Marsh. "This will be the Ellis Island platform for non-Canadian superstar managers."

In 2013, CQI was reporting a decline in AUM following the sale of the majority of advisory contracts to Fiera Capital Corp. by GMP Capital.

While the Fiera deal gave GMP Capital cash proceeds of $10.8 million, CQI was unable to re-gain momentum and earlier this month during a quarterly earnings call, GMP Capital Inc. announced they had decided to terminate each of the CQI Equity Opportunity Fund I, CQI Equity Opportunities Fund II, CQI Income Opportunities Fund and CQI Core Equity Fund.

"I think the driver of GMP remaining in the business after we had sold the bulk of the asset in 2013 was really focused on whether we could offer a product to RGMP that was going to be compelling to their channel," says Harris Fricker, chief executive officer of GMP during a conference call with analysts. "What became clear as we got one or two years under our belt was that [CQI] was better owned and engineered by Richardson GMP."

As a result, GMP reported that CQI intends to wind down its fund operations and return invested capital to clients.

"We just didn't have sufficient critical mass for that ever to be a material part of our business," adds Fricker. "and through discussions with Richardson GMP we believe they are going to explore a more compelling route on the product side."