Canaccord’s Canadian wealth arm acquires more assets amid capital markets downturn

Canaccord Genuity Group Inc. is adding $1.5-billion in client assets to its Canadian wealth management division with the purchase of Mercer Global Investments Canada Ltd.’s private wealth business.

The deal – which is subject to regulatory approval and is expected to close within the next three months – will bolster Canaccord Genuity Wealth Management’s existing $88.6-billion in total assets, the majority of which are in Britain. The purchase price was not disclosed.

The deal will include “partners and employees” of Mercer Private Wealth, the company said in a news release, as well as Mercer’s investment professionals in Winnipeg, Montreal, Toronto and Edmonton.

Nearly a month ago, Canaccord Genuity Group’s management team proposed a $1.1-billion bid to take the independent investment bank private. A special committee of directors has rejected the proposal, which is worth $11.25 per share, saying they are awaiting the results of a formal valuation being prepared by Royal Bank of Canada.

Similar to Canada’s large banks, Canaccord has been focused on adding assets in its wealth management arm because the division earns fees that tend to be much more stable than capital markets revenues. Canaccord’s capital markets fees tend to be particularly volatile because the investment bank often advises growth companies that need to raise cash during hot markets, but then go quiet when markets fall.

“This development – the addition of the Mercer team – supports our long-term strategy of growing our client assets and supporting the continued growth and success of the investment professionals who join the Canaccord Genuity platform,” Canaccord’s president of wealth management, Stuart Raftus, said in an e-mail.

Wealth management operations now account for 47 per cent of Canaccord’s total annual revenue as of the first half of the 2023 fiscal year, compared with just 26 per cent in 2014, according to data reported in a recent investor presentation.

Part of that growth has come from the company’s aggressive recruitment efforts in Canada. It has hired 45 adviser teams in the country since 2016, and added more than $20-billion in Canadian assets.

The growth also comes from acquisitions. Canaccord made a splash in Britain with its 2011 acquisition of Collins Stewart Hawkpoint for $407-million. It has followed up with subsequent deals, including the purchase of London-based Thomas Miller Wealth Management Ltd. and its private client business in the Isle of Man, adding £1-billion (about $1.6-billion) in client assets. Canaccord also paid $23-million to acquire Australia-based Patersons Securities Ltd., which added $3-billion in assets.

In early 2021, the company acquired Edinburgh-based Adam & Company from Royal Bank of Scotland PLC for £54million (about $93.4-million). The deal boosted Canaccord’s client assets by another $2.9-billion.

During the same year, the company spent $278-million to buy London-based Punter Southall Wealth Ltd., adding £5billion in client assets to its British wealth management business, or about $8.2-billion.

Canaccord’s global expansion over the past five years has resulted in its British operations outpacing its other geographic regions in total assets. It has about $50-billion in assets under management there, compared with $34-billion in Canada and $4.7-billion in Australia. The British wealth management operation generated $81-million in revenue in the quarter ended Sept. 30.