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National Bank poised to sell Natcan unit: sources

Charla Jones/The Globe and Mail

National Bank of Canada is in talks to sell its Natcan asset management arm to Fiera Sceptre Inc. in return for a stake of approximately 30 per cent in the merged firm, sources said Friday. The deal could be announced as early as Monday.

Fiera Sceptre, a mainly institutional money manager, was formed in 2010 from the merger of Fiera Capital Inc., founded by Jean-Guy Desjardins, and Sceptre Investment Counsel Ltd.

Together, insiders of Fiera Sceptre and Montreal-based Desjardins Financial Group control nearly 60 per cent of Fiera Sceptre through the public shares and private voting shares. Desjardins Financial's stake is estimated to be between 16 and 19 per cent.

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National Bank spokesman Claude Breton declined comment; calls to Fiera Sceptre were not been returned.

Natcan Investment Management has more than $25-billion in assets under management, while Fiera Sceptre has $30-billion in assets. If this transaction is successfully completed, it would "make Fiera Sceptre a major player" in its space, Scotia Capital analyst Phil Hardie wrote in a note to clients.

"Economies of scale and cost synergies are likely to help boost the combined entities' EBITDA [earnings before interest, taxes, depreciation and amortization]margins."

Fiera Sceptre is a Canadian-focused asset manager, but made its first foray into the U.S. market last fall by opening an office in Boston.

CI Financial Corp. controls about 12 per cent of Fiera Sceptre through various mutual funds. CI Financial executives would not comment on any proposed transaction.

Industry sources suggested that National Bank could be content with a smaller stake in Fiera Sceptre with the hopes of buying the money manager down the road. The bank used the two-step approach in acquiring Winnipeg-based brokerage firm Wellington West Holdings Inc. last year – first taking a minority stake, then full ownership.

Mr. Desjardins, Fiera Sceptre's chief executive officer, founded TAL Global Investment Management Inc. in 1972 and sold control to Canadian Imperial Bank of Commerce in 1994. The remaining stake was sold to that bank in 2001. He started Fiera Capital in 2002 with backing from Jean Monty, former CEO of BCE Inc.

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Citing unnamed sources, Les Affaires, a Montreal business publication, said earlier on Friday that National Bank was set to announce a sale agreement early next week.

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