Canada's Fiera Capital eyes more Asia acquisitions

Canadian asset manager Fiera Capital is on the prowl for more acquisitions after its purchase of Hong Kong-based alternative assets firm Clearwater Capital Partners in March.

Acquisitions are a key component of Fiera Capital’s growth strategy as it seeks to grow its assets under management to C$200 billion ($150 billion) by 2020 from C$131 billion at the end of this year's first quarter. 

“We currently have a pipeline of 12-15 potential acquisitions in the US, Canada, Europe and Asia,” John Valentini, global chief financial officer and president of the private alternative investments division at Fiera Capital, told AsianInvestor in an emailed interview last week.

A spokesman for Fiera Capital later added that the mergers could be in either the traditional or alternatives assets space.

Its first Asia-Pacific acquisition, Clearwater Capital Partners (CCP), was founded by Robert Petty and Amit Gupta in 2001 and specialises in special-situation investments in public and private debt or equity of local and regional issuers.

The firm’s assets will be added to Fiera’s private alternative investments, although it is expected to operate independently on the investing side, a spokesperson told AsianInvestor earlier.

Valentini said CCP’s expertise in Asian credit and special situations would help to complement Fiera Capital’s existing suite of private markets strategies, while establishing a foothold in the Asia-Pacific.

“We expect to further build our presence in Asia Pacific over time,” he said. 

Credit markets in Asia offer a relatively untapped reservoir of private debt opportunities compared with the mature and competitive private debt markets of North America and Europe, said a report by alternative asset industry tracker Prequin issued in early June.

With increasing investor interest, private debt fund managers in Asia have also seen fundraising success in recent years.

“2017 was a strong year for Asia-focused private debt fundraising, with 15 funds reaching a final close, raising an aggregate $6.4 billion in capital. This is the second highest amount of capital raised targeting the region to date and resulted in an average fund size of $427 million,” the report said.

Asia-focused funds accounted for 9% of all private debt funds closed in 2017, three percentage points higher than in 2016, it added.

GROWING CONSOLIDATION

Fiera's CCP acquisition comes at a time of consolidation within the broader global asset management industry.

Asset management mergers and acquisitions (between alternative asset managers as well as between traditional asset managers and alts specialists) last year jumped to their highest level since 2008 with a total of 67 deals recorded, according to Sandler O’Neill and Partners. That's a 40% increase from the 48 transactions posted in 2016, the US-based investment banking and financial group said in its 2017 Asset Manager Transaction Review released in February. 

Alternative asset management deal flow is expected to remain robust in 2018. “In particular, real asset strategies are less correlated to the broader market, such as real estate and infrastructure, will be at the top of buyers’ target lists,” the report noted.

Seungha Ku, a partner for offshore private equity at mainland China-headquartered CreditEase, which runs a wealth manager and peer-to-peer lender, noted that the global M&A activity is being driven by the fact asset managers continue to seek scale and offer a more diverse product suite to clients.

"They can try doing this in-house or inorganically via M&As," he told AsianInvestor.

Some of the big boys of asset management have also been caught up in the wave: in April, BlackRock, the world's largest money manager, announced it would acquire US-based private credit specialist Tennenbaum Partners as it sought to further strengthen its private credit market expertise.

Appetite for alternatives such as private debt and private equity remains strong as asset owners broaden their hunt for yield.

Canada's Public Sector Pension Investment Board has doubled its private debt allocation over the past year while growing its wider unlisted asset portfolio, its latest annual report shows. Insurers are also ideally placed to take advantage of the illiquidity premium in alts assets, William Chan, HSBC Insurance's chief investment officer for Hong Kong, recently told AsianInvestor.

Ernest Chan contributed to this story.