Magazine article American Banker

Network Expansion Key to Mackenzie Deal

Magazine article American Banker

Network Expansion Key to Mackenzie Deal

Article excerpt

Both companies in the merger that will solidify Investors Group Inc.'s leadership in the Canadian mutual funds market say the promise of more distribution strength was the key to a deal that underscores growing interest in a hot marketplace.

Investors Group's $2.7 billion purchase of fellow Canadian money manager Mackenzie Financial Corp. -- which fielded offers in two months of intense bidding -- would create Canada's largest fund distribution network. Toronto-based Mackenzie manages $21.1 billion of assets for a million investors in its family of 150 mutual funds, third in Canada behind AIM Funds Management's $23.3 billion and Investors Group's $28.9 billion.

Robert Gratton, president and chief executive officer of Power Financial Corp., the Montreal parent of Winnipeg-based Investors Group, said buying Mackenzie will let Investors Group widen the network of financial planners that use its funds. Jim Hunter, president and CEO of Mackenzie Financial, said his company also wanted broader distribution for its own product lines, particularly its annuities.

As part of Power Financial, Mr. Hunter said, Mackenzie will have easier distribution access -- both for its mutual funds and its annuities -- to Power Financial's Great-West Life Assurance and London Life subsidiaries.

The Canadian fund market grew 12% in 2000, according to the Investment Institute of Canada, compared with the 2.2% rise in U.S. mutual funds estimated by the Investment Company Institute.

Kim Flood, director of external communications for Fidelity Investments' Canadian unit, said, "The Canadian market is very hot right now, and it is important to get as much market share as possible. …

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