Calgary’s Mawer Investment Management Ltd., which oversees $50-billion of client money, has decided not to sell itself. Instead, it will forge ahead as an independent firm.
For more than 40 years, Mawer has operated as an independent that is free from bank ownership. In November, however, the company revealed that it had hired bankers to consider a sale amid a frothy market for asset managers.
At the time, Mawer stressed that a sale was not guaranteed. On Friday, the firm formally ruled one out.
“While we appreciate the external interest in the firm, the process reconfirmed our long-standing belief that Mawer’s high-performing team and culture, investment approach, and client-centric focus is best sustained by continuing our independent ownership model started over 40 years ago,” Mawer president Michael Mezei said in a statement.
Mawer launched its strategic review after a number of long-standing independent firms sold themselves to large Canadian banks. In 2018 alone, Bank of Nova Scotia acquired MD Management for $2.6-billion and Jarislowsky Fraser Ltd. for $950-million, while Toronto-Dominion Bank acquired Greystone Managed Investments Inc. for $792-million.
Lately, the banks have been hungry for asset managers because they see wealth management as their major growth driver over the next decade. The lending and housing boom is cooling, and baby boomers are approaching and entering retirement, which raises questions about saving and investing.
Many asset managers are also searching for scale. The share of investable assets that are in exchange-traded funds is growing rapidly, and the biggest global providers of ETFs, such as BlackRock Inc., can spread their fixed expenses over trillions of dollars in assets. In turn, they charge extremely low fund fees. Rivals often feel the need to acquire in order to compete.
Against this backdrop, asset managers have been selling for good prices. Canadian money managers are typically purchased for somewhere between 1 per cent and 3 per cent of their assets under management (AUM), but Bank of Nova Scotia recently acquired MD Management for 5.3 per cent of its AUM. At that same level, Mawer would have been worth $2.65-billion.
Tim Kiladze