Fiera grows to $54 billion in assets under management
National Bank takes 35% strategic stake in Fiera
Fiera and National Bank enter into long-term asset management agreement
Jean-Guy Desjardins remains controlling shareholder of Fiera
Strong support by independent Class A shareholders
MONTREAL, Feb. 27, 2012 /CNW Telbec/ - Fiera Sceptre Inc. ("Fiera" or
the "Firm") (TSX: FSZ) and National Bank of Canada ("National Bank" or
the "Bank") (TSX: NA) announced today that they have entered into a
strategic alliance that will result in Fiera becoming one of the top
five independent asset managers in Canada, with the scale and talent to
assume a leading role in the Canadian asset management industry. The
parties have signed a binding agreement (the "Agreement") under which
Fiera will acquire the business of Natcan Investment Management Inc.
("Natcan") from the Bank for $309.5 million subject to reduction. The
Natcan operations will then be fully integrated into Fiera's existing
business. In return, the Bank, through Natcan, will receive class A
subordinate voting shares (the "Class A Shares") representing 35% of the issued and outstanding shares of Fiera along
with an option to increase its stake to 40%. Upon closing of the
transaction, the Firm will change its name to Fiera Capital. Jean-Guy
Desjardins will continue as Chairman, CEO, CIO and controlling
shareholder of Fiera.
"The acquisition of the Natcan business adds to our established earnings
base, brings additional research and portfolio management depth, and
enhances an already strong platform, positioning us for future growth.
Our goal is to quickly become a major player in the ranks of North
American asset managers," said Jean-Guy Desjardins. "Fiera will have
approximately $54 billion in assets under management as a result of the
transaction, vaulting our firm into the ranks of the largest
independent asset managers in Canada."
"We see tremendous growth potential for the Canadian asset management
business. By combining Natcan's business with Fiera and by becoming a
significant long-term partner with them, we help Fiera to gain the
critical mass and expertise required to compete with the best asset
management businesses in Canada and globally. We are confident this
will be a benefit both to Fiera and to National Bank," said Louis
Vachon, President and CEO of National Bank.
"The transaction fits perfectly with our plan of developing key
partnerships in order to grow our reach in selected areas of our Wealth
Management business. It also helps us keep focused on our own core
business of growing our advice-based distribution capabilities, which
is one of our strategic priorities," according to Luc Paiement,
National Bank's Executive Vice President, Wealth Management.
As a founding shareholder of Fiera, Desjardins Financial Group supports
Fiera's growth strategy as one of Canada's leading independent asset
managers and will continue to focus on the distribution of highly
performing funds to its clients across the Desjardins network.
Fiera Board of Directors and Special Committee Review
Because certain aspects of the transaction involve arrangements between
Jean-Guy Desjardins and the Bank, a Special Committee of Independent
Directors of the Fiera Board of Directors was established to review and
evaluate the transaction and provide a recommendation to the Board.
The Special Committee is comprised of David R. Shaw (Chair), Arthur R.A.
Scace and W. Ross Walker. Over the course of numerous meetings, the
Special Committee considered a number of factors in connection with the
transaction, received advice from its independent legal counsel and
financial advisors, including a fairness opinion, and determined that
the transaction was in the best interests of Fiera and unanimously
recommended to the Board of Directors that it approve the transaction.
The Board of Directors of Fiera has, following consultation with its
financial advisors and legal counsels, determined that the transaction
is fair, from a financial point of view, to Fiera shareholders and is
in the best interests of Fiera, and unanimously recommends that
shareholders vote in favour of the transaction.
Under the rules of the Toronto Stock Exchange, the transaction is
subject to the approval of a majority of the votes cast by the holders
of Class A Shares of Fiera excluding votes attaching to the 833,333
Class A Shares indirectly held by Jean C. Monty (a director of Fiera)
and the 60,000 Class A Shares held by Fiera L.P. (the limited
partnership through which Jean-Guy Desjardins, Desjardins Financial
Group and others indirectly hold their interest in Fiera).
In connection with the transaction, certain institutional shareholders
who collectively hold approximately 6.3 million Class A Shares
representing over 40% of the outstanding Class A Shares, have executed
agreements to vote their shares in favour of the transaction, subject
to certain rights of termination. Jean-Guy Desjardins and Fiera Capital
L.P. have also executed an agreement to support the transaction,
subject to certain rights of termination which survive any termination
of the Agreement. Details of these agreements will be available in the
management information circular.
Fiera has scheduled an annual and special meeting of shareholders for
March 29, 2012 to, among other things, consider a resolution
authorizing the issuance of the Class A Shares to be issued to the Bank
at the closing of the transaction, along with certain other
transaction-related matters (including the below-described entitlement
of the Bank to acquire additional Class A Shares representing a total
of 5% of the total number of issued and outstanding shares of Fiera).
A management information circular outlining the details of the
transaction is expected to be mailed to shareholders of Fiera on or
about March 7, 2012. Class A Shareholders registered on the books of
Fiera at the close of business on February 23, 2012 will be entitled to receive notice of, and vote at, such annual and
special shareholders meeting.
Financial Terms of the Transaction
Under the terms of the Agreement, to acquire the Natcan business, Fiera
will pay $309.5 million subject to reduction in certain circumstances,
including $235 million at the closing of the transaction, and an amount
of $74.5 million paid over time after closing unless certain minimum
asset under management thresholds are not satisfied by the Bank and its
affiliates. At closing, Fiera will issue approximately 19.71 million
Class A Shares of Fiera, with the balance of the $235 million to be
paid in cash.
The value of the shares issued at closing will be calculated based on
the simple average of (i) the 10-day volume-weighted average price of
Fiera shares prior to the announcement and (ii) the 10-day volume
weighted average price prior to closing, provided that the share price
for this purpose will not be less than $7.00 nor more than $9.00.
Upon completion of the transaction, the Bank, through Natcan, will hold
35% of the total outstanding shares of the Firm. National Bank will
also receive options to acquire additional Class A Shares of Fiera at a
market price determined on the day of exercise, equal to 2.5% of total
shares outstanding at the end of September in each of 2013 and 2014.
If the options are fully exercised, the Bank would own 40% of the
outstanding Fiera equity. The Bank will also be entitled to protect
its ownership in Fiera pursuant to anti-dilution rights.
Assets under Management ("AUM") Agreement
It is a condition to the closing of the transaction that Fiera and the
Bank enter into a long-term AUM Agreement. Under its terms, the Bank
will be required to pay certain amounts to Fiera in the event a
specified minimum AUM ratio is not maintained. This ratio is calculated
by reference to the aggregate market value of the assets managed by
Fiera under investment management agreements with the Bank, and the
aggregate market value of certain specified categories of investment
assets under the control, direction or influence of the Bank.
These contractual arrangements, along with its shareholdings of Fiera,
will provide the Bank with a strong economic incentive to maintain a
significant percentage of its AUM with Fiera for at least the seven
year term of the AUM Agreement (the agreement is subject to renewal for
an additional three years, in accordance with its terms).
Board Representation and Voting Arrangement; Buy Sell Rights
Concurrent with the closing of the transaction, the Bank will enter into
a voting arrangement agreement with Jean-Guy Desjardins, who will
remain the controlling shareholder, CEO and Chief Investment Officer of
Fiera. The Bank will be entitled to appoint two members to the board of
directors of Fiera, chaired by Mr. Desjardins. Sylvain Brosseau will
remain President and Chief Operating Officer of Fiera.
Under the voting arrangement agreement, in certain circumstances where
the Bank and Jean-Guy Desjardins are unable to agree in respect of an
extraordinary matter proposed to be presented to Fiera shareholders,
Jean-Guy Desjardins would become entitled to require the Bank to buy
75% of his indirect interest in Fiera. In these circumstances,
Desjardins Financial Group would also be required to sell up to 75% of
its indirect interest in Fiera to the Bank. All such transactions
would occur at then current market values.
In addition, a principal investors agreement and related agreements will
be entered by, among others, Desjardins Financial Group, the Bank and
Arvestia Inc. (the corporation through which Jean-Guy Desjardins and
other managers currently hold their indirect interests in Fiera). Under
this agreement, and subject to certain conditions, Desjardins Financial
Group will have certain rights during a 4-year period to require the
Bank to buy up to 75% of its indirect interest in Fiera at stated
prices which vary, depending on circumstances, between 95% and up to
115% of then current market values.
These buy sell rights and obligations will be described in detail in the
management information circular to be mailed to shareholders in
connection with the transaction.
Closing Timing and Conditions
The transaction, which is expected to close by April 30, 2012, is
subject to the approval of a majority of the independent holders of
Class A Shares, along with regulatory approvals and other customary
Compelling Benefits for Clients
"The 'power of thinking' is the cornerstone that contributed to the
success of Fiera in the past and remains at the core of the Firm's
fundamental values today. Our investment philosophy is based on optimal
performance and intelligent innovation, combined with superior client
service. This integration of Natcan into Fiera will result in more
competitive and tailored multi-style investment solutions for a
diversified clientele of investors," according to Jean-Guy Desjardins.
"Combining the portfolio management expertise and research capabilities
of Natcan and Fiera will create a powerhouse asset manager that will
have the talent to create innovative products and the bench strength to
successfully compete for a broad range of investment mandates."
GMP Securities LP is acting as financial advisor to Fiera, and Osler,
Hoskin & Harcourt LLP is acting as Fiera's legal advisors. Stikeman
Elliott LLP is acting for Arvestia Inc. Norton Rose Canada LLP is the legal advisor to the Special Committee of
the Board of Directors of Fiera. National Bank Financial is National
Bank's financial advisor for the transaction and its legal advisor is
McCarthy Tétrault LLP.
Financial Impact of the Transaction for National Bank
The Bank has determined that the transaction will result in it realizing
a gain of approximately $177 million, or $1.09 per share, and will
increase its Tier 1 Capital by approximately 20 basis points. The
transaction is expected to be earnings neutral for the Bank on a
A conference call for analysts and portfolio managers to discuss this
announcement will be held on February 27, at 10:45 A.M., Eastern Time,
by phone at 1-800-704-5375. Please join the call at 10:40. Media are invited to participate in the call on a listen-only basis.
Live Internet broadcast of the conference call will also be accessible
(You will be asked to register to access the presentation slides and the
audio live stream of the call).
Management's comments will be available on the websites of Fiera, Natcan
and the National Bank shortly after the call.
Rebroadcast of Conference Call
The conference call recording will be available until March 28, 2012 by
dialing 416-626-4100 and entering access code 21581009.
Fiera is a leading publicly traded, independent investment firm. The
Firm is one of only a handful of full service, multi-product investment
firms in Canada, offering clients a proven top tier track record in
equity and fixed income management as well as depth and expertise in
asset allocation and alternative investments. For more information,
Additional information relating to the Firm, including the Firm's annual
information form, is on SEDAR at www.sedar.com.
Natcan is a subsidiary of National Bank of Canada that provides asset
management services to pension funds, mutual funds, insurance
companies, exchange-traded funds, foundations and other institutional
clients. With $25 billion in assets under management and more than 45 investment professionals in its Montreal and Toronto offices, Natcan offers a diversified and
comprehensive range of products across all global markets and multiple
investment styles. It's highly disciplined and rigorous risk-management
approach focuses on fundamental analyses, an approach all of our
investment managers implements with utter conviction and unrivaled
integrity.For more information, visit www.natcan.com.
About National Bank
National Bank is an integrated group that provides comprehensive
financial services to consumers, small and medium-sized enterprises and
large corporations in its core market, while offering specialized
services to its clients elsewhere in the world. National Bank offers a
full array of banking services, including retail, corporate and
investment banking. It is an active player on international capital
markets and, through its subsidiaries, is involved in securities
brokerage, insurance and wealth management as well as mutual fund and
retirement plan management. As at October 31, 2011, National Bank has
over CDN$156 billion in assets in accordance with Canadian GAAP and,
together with its subsidiaries, employs more than 19,000 people. The
Bank's securities are listed on the Toronto Stock Exchange (TSX: NA).
For more information, visit the Bank's website at www.nbc.ca. To access National Bank's financial literacy portal, visit www.clearfacts.ca
Caution Regarding Forward-Looking Information
Fiera's public communications often include oral or written
forward-looking statements. Statements of this type are included in
this press release and may be included in other filings with Canadian
securities regulators or in other communications. Forward-looking
statements may include comments with respect to Fiera's objectives,
strategies to achieve those objectives, expected financial results
(including those in the area of risk management), and the outlook for
Fiera's businesses and for the Canadian, United States and global
economies. Such statements are typically identified by words or phrases
such as "believe," "expect," "anticipate," "intent," "estimate,"
"plan," "may increase," "may fluctuate," and similar expressions of
future or conditional verbs, such as "will," "should," "would" and
By their very nature, forward-looking statements involve numerous
assumptions, inherent risks and uncertainties, both general and
specific, and the risk that predictions and other forward-looking
statements will not prove to be accurate. Do not unduly rely on
forward-looking statements, as a number of important factors, many of
which are beyond Fiera's control, could cause actual results to differ
materially from the estimates and intentions expressed in such
forward-looking statements. These factors include, but are not limited
to: the economic and financial conditions in Canada and globally;
fluctuations in interest rates and currency values; liquidity;
significant market volatility and interruptions; the failure of third
parties to comply with their obligations to Fiera and its affiliates;
the effect of changes in monetary policy; legislative and regulatory
developments in Canada and elsewhere, including changes in tax laws;
operational and reputational risks; the risk that Fiera's risk
management models may not take into account all relevant factors; the
accuracy and completeness of information received by Fiera; Fiera's
ability to complete Natcan's acquisition and integrate the Natcan
business and its other growth strategies; changes in accounting
policies and methods Fiera uses to report its financial condition and
the results of its operations, including uncertainties associated with
critical accounting assumptions and estimates; the effect of applying
future accounting changes; Fiera's ability to attract and retain key
executives; technological developments; fraud by internal or external
parties; consolidation in the Canadian investment management sector;
competition, both from new entrants and established competitors;
judicial and regulatory proceedings; acts of God, such as earthquakes
and hurricanes; the possible impact of international conflicts and
other developments, including terrorist acts and war on terrorism; the
effects of disease or illness on local, national or international
economies; disruptions to public infrastructure, including
transportation, communication, power and water; and Fiera's
anticipation of and success in managing the risks implied by the
These and other factors may cause Fiera's actual performance to differ
materially from that contemplated by forward-looking statements. For
more information, see the discussion starting on page 1 of Fiera's
annual information form dated December 15, 2011 for the financial year
ended September 30, 2011.
From time to time, the Bank makes written and oral forward-looking
statements, such as those contained in the Major Economic Trends and Outlook for National Bank sections of the 2011 Annual Report, other filings with Canadian
securities regulators, and in other communications, for the purpose of
describing the economic environment in which the Bank will operate
during fiscal 2012 and the objectives it has set for itself for that
period. These forward-looking statements are made pursuant to the "safe
harbour" provisions of Canadian and U.S. securities legislation. They
include, among others, statements with respect to the
economy—particularly the Canadian and U.S. economies—market changes,
observations regarding the Bank's objectives and its strategies for
achieving them, Bank projected financial returns and certain risks
faced by the Bank. These forward-looking statements are typically
identified by future or conditional verbs or words such as "outlook,"
"believe," "anticipate," "estimate," "project," "expect," "intend,"
"plan," and terms and expressions of similar import.
By their very nature, such forward-looking statements require
assumptions to be made and involve inherent risks and uncertainties,
both general and specific. Assumptions about the performance of the
Canadian and U.S. economies in 2012 and how that will affect the Bank's
business are among the main factors considered in setting the Bank's
strategic priorities and objectives and in determining its financial
targets, including provisions for credit losses. In determining its
expectations for economic growth, both broadly and in the financial
services sector in particular, the Bank primarily considers historical
economic data provided by the Canadian and U.S. governments and their
agencies. Tax laws in the countries in which the Bank operates,
primarily Canada and the United States, are major factors it considers
when establishing its effective tax rate.
There is a strong possibility that express or implied projections
contained in such forward-looking statements will not materialize or
will not be accurate. The Bank recommends that readers not place undue
reliance on these statements, as a number of factors, many of which are
beyond the Bank's control, could cause actual future results,
conditions, actions or events to differ materially from the targets,
expectations, estimates or intentions expressed in the forward-looking
statements. These factors include the management of credit, market and
liquidity risks; general business, economic and financial market
conditions in Canada, the United States and certain other countries in
which the Bank conducts business, including the effects of the debt
crisis in certain European countries; the lowering of the U.S.
long-term sovereign debt rating by Standard & Poor's and the lowering
of the sovereign debt rating of certain European countries; the impact
of the movement of the Canadian dollar relative to other currencies,
particularly the U.S. dollar; the effects of changes in monetary
policy, including changes in interest rate policies of the Bank of
Canada and the U.S. Federal Reserve; the effects of competition in the
markets in which the Bank operates; the impact of changes in the laws
and regulations regulating financial services and enforcement thereof
(including banking, insurance and securities); judicial proceedings,
regulatory proceedings or claims, class actions or other recourses of
various nature; the situation with respect to the restructured notes of
the master asset vehicle (MAV) conduits, in particular the realizable
value of underlying assets; the Bank's ability to obtain accurate and
complete information from or on behalf of its clients or
counterparties; the Bank's ability to successfully realign its
organization, resources and processes; its ability to complete
strategic acquisitions and integrate them successfully; changes in the
accounting policies and methods the Bank uses to report its financial
condition, including uncertainties associated with critical accounting
assumptions and estimates; the Bank's ability to recruit and retain key
officers; operational risks, including risks related to the Bank's
reliance on third parties to ensure access to the infrastructure
essential to the Bank's business as well as other factors that may
affect future results, including changes in trade policies; timely
development of new products and services; changes in estimates relating
to reserves; changes in tax laws; technological changes; unexpected
changes in consumer spending and saving habits; natural disasters; the
possible impact on the business from public health emergencies,
conflicts, other international events and developments, including those
relating to the war on terrorism; and the Bank's success in
anticipating and managing the foregoing risks. A substantial amount of
the Bank's business involves making loans or otherwise committing
resources to specific companies, industries or countries. Unforeseen
events affecting such borrowers, industries or countries could have a
material adverse effect on the Bank's financial results, businesses,
financial condition, or liquidity.
The foregoing list of risk factors is not exhaustive. Additional
information about these factors can be found in the Risk Management and Factors That Could Affect Future Results sections of the 2011 Annual Report. Investors and others who base
themselves on the Bank's forward-looking statements should carefully
consider the above factors as well as the uncertainties they represent
and the risk they entail. The Bank also cautions readers not to place
undue reliance on these forward-looking statements. Except as required
by law, the Bank does not undertake to update any forward-looking
statements, whether written or oral, that may be made from time to
time, by it or on its behalf.
The forward-looking information contained in this document is presented
for the purpose of interpreting the information contained herein and
may not be appropriate for other purposes.
SOURCE FIERA SCEPTRE INC.
For further information:
(The telephone numbers provided below are for the exclusive use of journalists, other media representatives and shareholders.):
For Fiera Sceptre:
NATIONAL Public Relations
For National Bank of Canada
Senior Manager, Public Affairs
National Bank of Canada
Senior Director, Investor Relations
National Bank of Canada