Canadian $119 billion fund targets Australia

CI Financial, one of Canada’s largest investment firms, is looking to expand in the Australian market on the back of its investment in a local funds management business. 

In November, the Canadian asset manager bought an 80 per cent stake in Grant Samuel Funds Management (GSFM). It was the first international acquisition for the $119 billion business. 

"While we are a very large business, we have no exposure outside Canada. Scale is going to be important in the asset management sector going forward. We need to diversify our risk and we need to diversify our business. It is important that we look outside our geography," CI Financial CEO Peter Anderson said.

CI Financial has identified three target markets include the United States, the United Kingdom and Australia. According to Anderson, Australia is now its most attractive market due to its regulation and transparency. 

"Australia has a regulated environment that is trustworthy and that is something that you can’t say much about other jurisdictions," Anderson said.

He also noted Australia's move to deal with remuneration and conflicts of interest, unlike Canada which has "an awful lot of embedded compensation". 

Anderson also recognised the similarities between the Canadian and Australia banking sector. Both countries have a highly concentrated sector – four majors in Australia and five in Canada. 

Banking on competition

"The Canadian banks are our biggest competitor; however, they were not always interested in asset management." 

During 1990 and 2000, asset managers including CI Financial took a lot of deposits away from the banks which allowed these firms to "get a leg up". 

"Banks realised that asset management was not capital intensive so they decided to get into the business. The have grown very quickly and today the top five banks now own 50 per cent of the marker share." 

CI Financial, however, has been able to boost its market share in Canada and Anderson is confident the business can grow in Australia particularly as it is a nation of savers given the country's compulsory superannuation market. 

"We have a strong balance sheet and we are willing to use it in Australia. We have management in GSFM that we can trust. We are also cognisant that it will take several years to gain traction here. We will only launch new products that fill the gaps. We don’t want to dump a whole set of ideas in the market."

He also acknowledged that Brexit and the Trump presidency have implications for the firm's growth plans in the United Kingdom and United States.  

"We are not so interested in the United Kingdom because of Brexit but the currency is attractive. There will obviously be challenges under Trump.

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