A Bay street sign is seen in the financial district in Toronto.Mark Blinch/The Globe and Mail
In the next five years, Fiera Capital Corp. should be able to double in size, according to the asset manager's founder.
The country's third-largest independent investment manager has been building its business in the U.S. in the last couple of years, and now has about $100-billion in assets under management. The goal is to have $200-billion in hand by 2020, says Jean-Guy Desjardins, chief executive officer of Fiera. That's the size that North American investment managers will have to be to be to survive industry pressures and still exist in 25 years he said.
To reach that target, Mr. Desjardins said the company will acquire more institutional asset managers in the U.S., looking for niche players with specialized investment expertise that are struggling under the weight of increased regulatory and other costs, or that are looking to expand their business in new segments. He's also counting on organic growth.
Since ramping up for a U.S. expansion two years ago, Fiera has already acquired three U.S. asset managers and now has $20-billion in assets in the country. The U.S. accounts for more than 20 per cent of Fiera's revenue, though, since the firm can charge higher fees in the less competitive U.S. market.
Fiera is also keeping an eye out for funds that specialize in emerging-markets equities – a hole Mr. Desjardins wants to fill with an acquisition soon, while global capital is flowing away from these regions. "We're putting quite a bit of effort into trying to identify one," he said at a lunch event with brokers on Monday. "When they're going through hard times they tend to be more open to selling, merging or getting married to someone else," Mr. Desjardins said of the prospects.
And then there's alternative fixed income, a diverse group of strategies that includes leveraged loans and private debt. Fiera has brought aboard an employee to take a hard look at the 360 U.S. players that offer such investments. The goal is to determine how Fiera should best operate in the market, such as hiring new professionals or possibly acquiring some companies that specialize in this area.
Mr. Desjardins said Fiera has already had some success in its home market of Quebec, providing floating-rate loans in the construction industry as banks have moved out of the market.
"We were looking for alternative fixed-income strategies for our clients in order to generate more yield without necessarily taking more risks, like high-yield bonds," he said. Right now, the company has about 12 per cent of its assets invested in alternative fixed income, including real estate.
In the meantime, Fiera's next move will be to shift its portfolio toward investments in Canadian equities, away from U.S. equities, with an expectation that oil prices and the Canadian dollar are poised to climb. "We think the Canadian stock market will meaningfully outperform the U.S. stock market in the next 12 to 18 months," Mr. Desjardins said.