Canadian fund company buys high-end asset manager

FWR Staff

27 November 2006

AGF boosts private-client business with an 80% stake in Highstreet Partners. Canadian asset manager AGF Management has set itself up to become more of a force in Canada's high-wealth and institutional funds business by acquiring the bulk of Highstreet Partners, a privately held investment counsel firm based in London, Ontario.

Toronto-based AGF will take an 80% stake in Highstreet and Highstreet's management team, led by CEO Rob Badun, will hang on to the remaining 20%. The transaction includes a combination of cash and, subject to the Toronto Stock Exchange's approval, AGF non-voting class B shares. Highstreet's partners have agreed to stagger their cash-out of the stock portion of their payment through a three-year period.

AGF did not disclose the purchase price. Both parties expect the deal will be done before this month is out.

New levels

" provides us both executive leadership and complements our investment management expertise," says AGF's CEO Blake Goldring.

Highstreet will become part of AGF Private Investment Management -- AGF PIM for short -- which Badun will have a hand in running as president.

Tying up with AGF "will enable Highstreet to achieve new levels of growth, while we continue to provide our clients the investment and service excellence they expect," says Badun. "I look forward to working with the AGF PIM firms to develop a vision and strategy for maximizing growth and capitalizing on synergies."

Highstreet -- which manages the U.S. equivalent of around $4.2 billion for private investors, pension plans, foundations and other institutions -- uses a quantitative investment process that "has proven consistently to outperform the market while protecting capital in down markets," according to AGF.

AGF manages about $36 billion, mostly in mutual funds, for about 1 million investors. When the deal with Highstreet is completed, AGF PIM will manage around $9.6 billion. AGF danced around questions about plans to introduce Highstreet-managed retail mutual funds at an analyst conference after the deal was announced last week. Highstreet's Canadian Equity fund is rated highly, but then AGF is fairly glutted with Canadian-stock offerings, according to Morningstar Canada analyst Rudy Luukko. -FWR