Business as usual as Scotia puts CI Financial stake up for sale - EntornoInteligente

Entornointeligente.com / Jamaica Gleaner / Avia Collinder, Business Reporter Scotiabank Canada’s plan to sell its 37 per cent stake in asset manager CI Financial will not affect distribution of the CI mutual funds by Scotia Investment Jamaica Limited (SIJL), says Lissant Mitchell.

Mitchell, the CEO of SIJL, said the company has been selling CI mutual funds for about a decade, long before Scotiabank Canada bought into CI Financial in 2008.

“It’s a Toronto issue,” he said. “The decision by BNS Canada to sell the CI shares doesn’t impact our local business nor any changes to our product suite. CI funds continues to be in the suite of mutual funds distributed via Scotia Investments Jamaica.”

Charles Ross, managing director of Sterling Asset Management, says the only concern to Jamaican investors would be whether control of the company will change and whether that would affect a change in investment managers.

“Because, really, what the investors would be concerned about are the investment managers who make the investment decisions,” said Ross. “Those going into the fund are people who have confidence in the performance of those managers.”

Sterling and Scotia Investments are two of 11 local companies named by Financial Services Commission as sellers of CI products, the others being NCB Capital Markets, First Global Financial Services, Mayberry Investments, JN Fund Managers, Sagicor Investments, Barita Investments, Stocks & Securities, VM Wealth Management and Proven Wealth.

“If people own shares in the company, then they will be concerned that because it is such a large stake the price of shares may fall, I believe, for a while,” said Ross.

“But as long as there is no change in the day-to-day management of the company then there is no need to be worried. It is still a very large asset manager in Canada and I would imagine the company would continue to prosper and do well.”

EXPECTED MOVE

Last week, Scotiabank Canada announced that it would dispose of its stake in CI, a move that was not unexpected to the market, which predicted it could happen after the banking group’s 2011 acquisition of another asset management operation, known as Dundee Wealth, and a reported dispute that same year over shareholders’ rights related to restrictions on Scotiabank’s ability to buy and sell CI shares.

Scotiabank said it would sell its CI stake valued at CDN$3.8 billion in one or a series of transactions and invest the capital elsewhere. The banking group reportedly paid CDN$2.3 billion to acquire the shares from Sun Life Financial in October 2008. The deal was then described as Scotia’s biggest acquisition ever.

CI Financial, one of whose directors is Jamaica’s Raymond Chang, said last Thursday that it was considering the implications of the sale on CI’s other shareholders. The company is publicly listed on the Toronto Stock Exchange

“As part of this, CI intends to review its capital structure and dividend policy to ensure that it has the appropriate resources available to respond to any monetisation plan Scotiabank seeks to implement,” the Canadian company said in a statement.

CI also sought to assure clients, business partners and shareholders “that the bank’s decision has no impact on the management of CI or the strong fundamentals of its business.”

The company’s assets under management topped CDN$97 billion and total assets were valued at CDN$125.8 billion as at April 30, 2014.

Scotiabank is being advised on the CI share disposal by Goldman Sachs and its own capital markets subsidiary, Scotia Capital.

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