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Sun Life expands emerging markets footprint with acquisition

A general view of the Sun Life Financial building is seen in Toronto May 6, 2015.

FRED THORNHILL/REUTERS

Sun Life Financial Inc. is expanding its emerging markets footprint with the acquisition of Excel Funds Management Inc.

Sun Life's mutual fund division, Sun Life Global Investments (Canada) Inc., announced late Thursday it will be purchasing all of the outstanding shares of both Excel Funds Management Inc. and Excel Investment Counsel Inc., including its recently launched $4-million ETF business.

Excel funds, most well known among investors for its emerging markets offerings, has approximately $700-million in assets under management that will now be added to the $18-billion in AUM managed by Sun Life Global Investments

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While financial terms of the transaction were not disclosed, the acquisition will help accelerate Sun Life's broader strategy to expand its wealth management business in Canada.

"We believe strongly in emerging markets, and its important that investors think about emerging markets as part of their portfolio, " said Rick Headrick, president of Sun Life Global Investments in an interview with the Globe and Mail. "Acquiring Excel Funds allows us to now be the emerging markets leader in Canada with several funds that have an impressive and long investment performance."

Along with acquiring Excel's mutual fund family, which consists of 10 funds, Sun Life will now join the growing number of mutual fund players jumping into the ETF game. Excel entered the ETF industry last May with two global ETF offerings: Excel Global Balanced Asset Allocation ETF and Excel Global Growth Asset Allocation ETF.

Mr. Headrick says he was not on the hunt for an ETF provider and the ETF side of the Excel business was not the primary driver behind the acquisition as the discussions between two companies had started well before Excel entered the ETF market.

The two companies have a well-established relationship that spans more than 19 years. when Birla Sun Life Asset Management began to sub-advise the Excel India Fund.

"We decided if we could come together in a more formal way, the sky really is the limit to where we can take this," says Mr. Headrick.

Bhim Asdhir, president and CEO of Excel Funds, will join the Sun Life Global Investments executive team, as well as become a member of the integration planning committee and continue as the senior relationship manager for the funds' sub-advisers and brokers. (No changes to staff or fund lineups have been announced at this time.)

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Mr. Asdhir says Excel was financially stable as an independent fund provider but Sun life's distribution network of 3300 advisers was what attracted him to the deal and will allow emerging market funds to reach a greater number of Canadians.

"The emerging market space is a big opportunity for Canadian investors and major players are just now staring to look at it," says Mr. Asdhir. "Over the next five years, this emerging market space is going to be a $100-billion opportunity ... and through this [acquisition] Sun Life has taken a leadership position in this area."

The deal is expected to close by the end of the fourth quarter of 2017, subject to regulatory approval.

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About the Author
Globe Investor Reporter

Clare O’Hara is a reporter at The Globe and Mail. Prior to that, Clare spent eight years as a staff writer at Investment Executive, a national newspaper for financial service industry professionals. More

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