The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
Thursday, May 23, 2002|
Sun Life Financial Services of Canada has reached an agreement to acquire a 30 percent interest in C.I. Fund Management, a Canada-based investment company, in exchange for mutual fund subsidiaries. CI's subsidiary companies include Spectrum Investment Management Limited and Clarica Diversico Ltd., the mutual fund arm of Clarica Life Insurance Company. The transaction also includes a strategic distribution agreement giving CI preferred access for its products to more than 4,000 Clarica agents and managers.
Sun Life Financial will receive the equivalent of approximately 74 million common shares of CI A 20 percent interest will be issued on closing, and the reminder will be in the form of non-voting preferred shares convertable in CI common shares. The conversion of the preferred shares will be subject to approval of CI shareholders.
The transaction also includes an agreement under which Sun Life Financial has agreed not to increase its stake in CI beyond 34 percent for three years. Sun Life Financial will enter into a shareholders agreement with certain CI manage shareholders, which will provide Sun Life Financial with representation on CI's board of directors.
"This transaction moves us closer to our strategic objective of achieving leadership positions in key target markets in North America. We will hold a significant ownership stake in what will become the fourth largest mutual fund manufacturer in Canada by long-term assets under management, accessing both the requisite scale and shelf space in a competitive industry," stated Donald Stewart, chairman and ceo at Sun Life. "This transaction also enhances our distribution strategy by offering clients, through Canada's largest direct sales force, greater choice and improved performance at highly-competitive prices."
"This deal increases CI's mutual and segregated fund assets by over 60%, and ensures that CI will continue to be a leader in the Canadian investment fund industry," added William Holland, CI's president and ceo. "For unitholders in the funds, being part of a larger company will provide important service and the potential for its reduction in the manage expense ratios of the funds."
The transaction, which is subject to regulatory approval, is expected to close in July.
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