CI Financial sees buyers' market for asset managers

Thu Sep 22, 2011 4:41pm EDT

* CI CEO says many U.S. firms already pitching to him

* Says more asset management firms coming up for sale

By John McCrank

Sept 22 (Reuters) - The slump in equity markets is taking a toll on many smaller North American asset managers, creating a buyers' market for firms looking for acquisitions, the chief executive of CI Financial (CIX.TO) said on Thursday.

CI, Canada's No. 3 investment fund company, is interested in making some small, "tuck-in" acquisitions, possibly adding to its distribution network for its institutional business in both the Canadian and U.S. markets, Stephen MacPhail said at the CIBC Eastern Institutional Investor Conference in Montreal.

He said the current market turmoil will surely create some casualties and could lead to some good deals.

"I can say that just from the number of U.S. firms that are coming up and pitching me on different opportunities - because I have made it clear that if there is the right opportunity in the U.S., we would look at it - there are going to be some opportunities," he said.

Any potential deal for CI would have to be one that does not carry too much risk, he added.

"We don't have any secret sauce that we can turn a bad business into a good business," he said. Even so, he said, CI's scale enables it to take unprofitable businesses and make them profitable.

CI's total assets, which include mutual, segregated, and hedge funds, separately managed accounts, structured products, pooled assets, and assets under administration, were just under C$100 billion at the end of its last reported quarter.

The Toronto-based firm, which is around 36 percent owned by Bank of Nova Scotia (BNS.TO), bought the Canadian mutual funds business of Hartford Financial Services Group (HIG.N) in December 2010. It paid an undisclosed amount for the business.

In Canada, McPhail expects to see more firms in the alternative asset management space to start coming onto the market.

Ideally, CI will pursue small deals that complement its global money management operations, or that will provide additional distribution for its institutional business, he said, rather than having to build anything from scratch.

"It's going to be an interesting market over the next year."

(Reporting by John McCrank)