Canada’s landscape of independent mutual fund managers has shrunk once again. Seamark Asset Management and GrowthWorks have agreed on a merger. The combination will create a mid-size firm with roughly $3 billion in assets under management.
The new firm will be called Matrix Asset Management, with GrowtWorks and Seamark as subsidiary brands under the new organization, which will have a national platform.
GrowthWorks president and CEO, David Levi, will become the president and CEO of Matrix.
“Matrix will immediately have a national platform to deliver a diverse suite of investment services and products with top quartile performances in several asset classes” says Levi, “This success across a diverse range of asset classes and client groups will make it a unique company in Canada.”
Rumours that the Halifax-based Seamark was up for acquisition have been around for some time, particularly after its largest wrap fund partner, the BMO Nesbitt Burns Advance Program, terminated Seamark as sub-advisor in April. At the time the move was viewed as a signal that Manulife Financial would outright purchase Seamark since the insurance giant owns 31% stake in the company.
Ultimately, however, it turned out it was GrowthWorks that stepped in.
“For Seamark, the deal with GrowthWorks is something of a lifeline in that it has been in a dreadful downward spiral following a decision by Clarington funds to terminate Seamark as the manager of more than $3 billion in assets in 2006, shortly after the Clarington funds were acquired by Industrial Alliance,” says Rudy Luukko, investment funds editor with Morningstar Canada. “Seamark went through a very rough stretch of performance in 2004 and 2005, this was clearly a factor in Clarington’s decision to drop them.”
Luukko says this deal should alleviate concerns about the company’s stability. With drastically improved fund performance, Seamark will be a nice addition to GrowthWorks’ continued expansion efforts in the Canadian retail fund market.
“It is helpful the Seamark funds have turned around. At Morningstar we have six institutional mandates tracked in equity, balanced and fixed income categories. And all of these institutional mandates in Morningstar’s universe of Canada pool funds are either three or four star funds. Three stars mean an average risk-adjusted performance rating, while four stars denote an above-average rating.”
GrowthWorks bills itself primarily as a retail-focused venture capital investment firm, and has been on an acquisition spree of its own since last year, looking to expand its presence in the mainstream Canadian mutual fund market. Founded in 1998 by Levi, the company manages $1billion in assets and has seven offices located in major and regional centres across Canada.
This is the second deal for GrowthWorks this year. In May the company nearly doubled its assets purchasing after Mavrix Fund Management, which at the time was managing more than $500 million in assets. It currently offers specialty retail investment funds, including flow-through limited partnerships, through the Mavrix brand.
Seamark’s CEO, Brent Barrie, will remain CEO of Seamark; and its headquarters will stay in Halifax.
“This [merger] has the full support of our portfolio management team and is great news for our clients,” said Barrie. “This transaction will better position Seamark to fulfill its mission of delivering the best possible investment management service to our clients.”
A new board of directors is being created, and membership will include representatives from both the boards of GrowthWorks and SEAMARK, including Levi and Barrie. In addition, former Seamark CEO, G. Peter Marshall, will join Matrix’s board.
(10/29/09)