Montreal asset manager Fiera Capital is reportedly on the verge of losing a long-time shareholder while Desjardins Group wants to sell its stake.
Fiera announced Wednesday that Desjardins wanted to divest itself of its stake equivalent to 6.8% of the company’s outstanding shares.
The shares held by Desjardins are in a capital structure different from the rest of the shareholding. The provisions of this structure give Fiera the right to make an initial offer to Desjardins.
The management of the asset manager plans to present such an offer to the financial cooperative with a financial partner. “There is no guarantee that this transaction will come to fruition,” the company said in a press release.
TD Securities analyst Graham Ryding believes this is bad news. “Our first impression is that this is bad news. A major long-term shareholder and partner of founder Jean-Guy Desjardins wishes to sell. »
Desjardins has been a partner of Fiera from the very beginning. In 2003, Desjardins sold its majority stake in Elantis to Jean-Guy Desjardins. This transaction will be the first chapter in the creation of Fiera. It allowed Mr. Desjardins to get back into business after selling TAL Global Asset Management to CIBC.
Desjardins Group did not specify the reasons behind its decision to sell Fiera shares. The co-op said it would not grant an interview on the subject. “As investors, we have only applied our investment strategy,” responds Desjardins spokesperson Chantal Corbeil.
Mr. Ryding estimates that Desjardins’ stake is worth $55 million.
Fiera is going through tough times as its stock has lost nearly half its value since 2017. The departure of star portfolio manager Nadim Riz in 2021 has raised concerns among investors who fear an exodus of clients.
Analyst Geoffrey Kwan of RBC Capital Markets also takes a dim view of the departure of a long-time partner. He also wonders whether the disinvestment of Desjardins will have an impact on the funds that Fiera manages on behalf of the Quebec cooperative.
Desjardins assures that the transaction does not call into question its business relationship with Fiera. “Fiera Capital remains an important business partner for Desjardins (the funds it manages for us), specifies Ms. Corbeil in her email. The sale of these shares does not call into question our business relationship with Fiera. »
The transaction could have consequences on the control that Fiera’s senior management exercises over the company, underlines the RBC Capital Markets analyst. The capital structure where Desjardins shares are held holds Class B shares with founder Jean-Guy Desjardins and members of Fiera’s senior management.
Class A and B shares have the same weight for voting rights, except for the election of directors. Category A shareholders elect one third of the 9 directors while category B shareholders elect two thirds.