|
© Copyright 2000 Rogers Media. The following article first appeared in the September 2000 edition of
BENEFITS CANADA magazine.
Industry
By Andrea Davis
Griffin hopes to return to industry
Tim Griffin, former president and chief executive officer of RT Capital Management Inc., says he hopes to
return to the pension asset management industry after his 18-month suspension from the business has
expired. Griffin granted an exclusive e-mail interview to benefits canada in August.
"I'm not sure but I hope," Griffin wrote, "and [I] also believe all that's happened will be put into
perspective over time and that there will be new opportunities for me."
Griffin received an 18-month suspension as part of a settlement agreement between the Ontario Securities
Commission (OSC) and RT Capital Management as a result of the high closing scandal that hit the company
this summer. The pension and institutional investment management unit of the Royal Bank of Canada came
under fire after an OSC investigation confirmed instances of stock manipulation by some of the firm's
traders. Griffin also resigned his position as president and CEO, and paid an $8,000 fine to the OSC.
Griffin told benefits canada he received no pressure from Royal Bank management or the OSC to resign. The
decision was his.
"The company has been working hard to get back to business with an even higher standard of corporate
governance," Griffin wrote. "I too had been working to rebuild confidence in RT Capital before I left. This
process has to continue following the settlement with the OSC. Since I was keen for this to happen, I
stepped aside.
"I was the CEO and I believed I had to accept ultimate responsibility for the fact that this activity took
place while I was in charge of the company," he wrote.
Griffin says he did not know about the high closings until regulators brought it to his attention.
Griffin worked at RT Capital for 10 years, and five years before that at Royal Trust. He was named
president in 1996, and CEO in late 1998. His suspension bars him from acting as a director or officer of
any market participant for 18 months.--Kevin Press
Money managers consolidate
The Caisse de dépôt et placement du Québec, through its subsidiary Services financiers CDPQ,
has entered into a limited partnership with French bank Credit Commercial de France and U.S. investment
bank Putnam Lovell, with the goal of buying up smaller investment management firms.
Myriad Limited Partnership has an initial investment of $225 million--$95 million from both Services
financiers CDPQ and Credit Commercial de France, and $35 million from Putnam Lovell.
Myriad's first acquistion was Addenda Capital Inc., a Montreal-based fixed-income investment management
firm with about $5 billion in assets under management. The firm was founded by Carmand Normand, who becomes
the chairman of the board and chief of investment management with Myriad while his partner at Addenda,
Serge Rémillard, becomes Myriad's president and chief executive officer.
"The limited partnership separates the managerial responsibility from the financing," says Normand,
allowing portfolio managers to focus on what they do best--manage money. "If you have too much money at
stake within the company, you [might be] inclined to manage the company [instead of] managing your clients'
money."
With a consolidation trend under way in the money management industry, Normand says Addenda decided to look
for partners and become an acquisitor, rather than sell out to a bank or insurance company.
"The structure we'd like to have [for new acquisitions] is for Myriad to buy a large chunk of the firm but
keep the present management team keenly involved in the growth of that organization, through shared
ownership, through incentives so they want to remain there and keep doing what they do best, which is
performing for that company," says Joe DiMassimo, national vice-president, marketing and service with
Addenda.
Myriad aims to have $50 billion in assets under management within five years and to become a one-stop shop
for institutional clients.
"The purpose of Myriad is to have a group of portfolio managers that can manage anything that needs to be
managed, whether it be Canadian equity, U.S. equity, high-yield, managed futures and so on," says Normand.
Toronto-based YMG Capital Man-agement Inc., meanwhile, announced plans to acquire AlphaQuest Capital
Management Limited. AlphaQuest manages approximately $650 million in assets for institutional clients. The
deal increases YMG's assets under management to approximately $14 billion, says Michael Sprung,
vice-president, equities, with YMG.
"Over the last year or so, we've been making a concerted effort to grow assets in the active equity
management area in particular and the active pension fund management area in general," says Sprung. "That's
the kind of asset base that AlphQuest has and that's why they were attractive to us. It gives us more
critical mass in our active equity area."
The firm didn't disclose how much it paid for AlphaQuest's assets, saying only that the purchase price is a
combination of cash and YMG shares, payable over three years.
The AlphaQuest deal is the latest in a string of acquisitions YMG has made over the last year. In December,
the firm acquired Nisker Associates, Inc., a Toronto-based wealth management firm that focuses on the high
net worth market. In May 1999, YMG acquired Ultravest Management Corp., an institutional money management
firm.
"The transactions we have done have been primarily motivated by the fit of the client base, the direction
we want to go in and the fit of the philosophy of the manager we've acquired," says Sprung. "A lot of the
consolidators that have been buying a lot of firms out there leave them to run independently. We've been
buying firms with a view to growing YMG's business."
Other recent consolidations include U.S.-based Legg Mason's purchase of Perigee Inc., AIM Funds Management
Inc.'s (the Canadian arm of British mutual fund giant Amvescap PLC) purchase of Trimark Financial Corp. and
Templeton Management Limited's acquistion of Calgary-based Bissett & Associates Management Ltd.
Irshaad Ahmad, head of William M. Mercer Limited's investment consulting practice in Toronto, breaks the
recent consolidation activity into two categories.
"There's been the strategic type of activity where a larger firm acquires a smaller firm from a marketing,
synergies and product line point of view," he says. "But larger and more interesting [deals] are the ones
where foreign firms come in and join with Canadian firms or Canadian firms look for partnerships with
larger, global orangizations."
Ahmad attributes the consolidation trend in part to the recent increase in the foreign content limitations.
The last federal budget raised the foreign content limit from 20% to 25%. The ceiling will be further
increased to 30% in 2001.
"That puts potential pressure on revenue lines for Canadian companies if it's perceived they don't have
good depth on the foreign equity side," says Ahmad.
Canadian asset managers can either develop foreign equity expertise in-house, which can be costly, or they
can partner with larger, global firms.
"We think there's more [consolidation] to come," says Ahmad. "How long it's going to last is hard to say."
Bonham & Co. in the news
The president of Toronto-based Bonham & Co. Inc. Asset Management says he has received no confirmation
from the Ontario Securities Commission (OSC) that chairman and chief executive officer Mark Bonham is under
investigation.
"There's no OSC investigation of us, as far as we know. They're talking to some people, they're gathering
data and we've been asked to provide data to them," says Mark Sack, president of Bonham & Co.
The National Post reported on Aug. 7 that the OSC was investigating mutual fund company Strategic
Value Corporation and Bonham for allegedly engaging in a practice called manual closing. There have been no
further press reports since the original story.
Bonham is the former CEO of Strategic Value and still manages funds for the company. But Bonham & Co.'s
Sack, says that while the OSC has requested information, he is not aware of any investigation.
"We sought a legal opinion and an opinion from our auditors that the manual pricing actions we took were
permitted under the prospectus and, frankly, our internal system of checks and balances worked well,"
saysSack.
OSC spokesperson Rowena McDougall would neither confirm nor deny an investigation.
Manual closing occurs when fund managers use false closing prices of stocks to calculate the fund's daily
unit value. While it is considered a violation of certain requirements of the Ontario Securities Act,
manual closing is not a trading violation like the high closing practices for which RT Capital Management
Inc. was disciplined by the OSC.
The allegation comes just days after Bonham & Co. launched three new funds designed to lure
institutional and high net worth clients. Though it has no institutional clients yet, the firm is currently
engaged in the request-for-proposal process with two institutional investors.
"This is a marketplace that treads carefully, makes decisions based on relationships with people they know
and investment styles they become familiar with over time, so we don't anticipate chalking up billions of
dollars of assets in our first year," says Sack.
Great-West Life acquires new group biz
The Great-West Life Assurance Company is taking over the management of The Maritime Life Assurance
Company's small group insurance business--groups with less than $50,000 in annual premiums. The move
reflects a new business strategy at Maritime Life as the company focuses on its core group insurance
markets.
Under the deal, Maritime Life's small group insurance clients will be given a new group insurance plan with
Great-West Life on the renewal date of their current policy. The transition is expected to begin in
November and be completed by the end of 2001.
Maritime Life's small group business comprises about 1,100 clients with annual premiums of about $25
million. Great-West Life currently has 19,000 small group clients with more than $325 million in annual
premiums.
"The Canadian small business market is an important one," says Bob Nicholas, senior vice-president of
Maritime Life's group division, "but it is quite a specialized field and the success factors are different
from our core markets, which are mid-size and large groups and the trusteed and sponsored markets."
Maritime Life says it is not selling the business, but simply handing over the management of it.
For its part, Great-West Life says the deal will allow it to expand its small group insurance distribution
network through Maritime Life's producers.
--Kathryn Dorrell
|
News
News
