Sun Life Financial Inc. is expanding its emerging markets footprint with the purchase of Excel Funds Management Inc..
Sun Life’s mutual fund division, Sun Life Global Investments (Canada) Inc., announced late Thursday it’ll be buying all the outstanding shares of both Excel Funds Management Inc. and Excel Investment Counsel Inc., including its recently launched $4-million ETF company.
Excel funds, most well known among investors because of its emerging markets offerings, has roughly $700-million in funds under management that will now be added to the $18-billion in AUM handled by Sun Life Global Investments
While financial terms of the transaction weren’t disclosed, the acquisition will help hasten Sun Life’s wider strategy to expand its wealth management firm in Canada.
“We believe strongly in emerging markets, and its important that investors consider emerging markets as part of their portfolio, ” stated Rick Headrick, president of Sun Life Global Investments in an interview with the Globe and Mail. “Acquiring Excel Funds enables us to now be the emerging markets pioneer in Canada with several funds which have an impressive and long investment performance.”
Together with acquiring Excel’s mutual fund family, which is composed of 10 funds, Sun Life will now join the growing number of mutual fund players jumping into the ETF game. Excel entered the ETF industry last May with 2 international ETF offerings: Excel Global Balanced Asset Allocation ETF and Excel Global Growth Asset Allocation ETF.
Mr. Headrick says he wasn’t on the search for an ETF supplier and the ETF side of the Excel business wasn’t the principal driver behind the acquisition as the talks between two companies had begun well before Excel entered the ETF marketplace.
Both companies have a well-established connection that spans over 19 years. When Birla Sun Life Asset Management started to sub-advise the Excel India Fund.
“We decided if we can come together in a more formal manner, the sky is really the limit to where we could take this,” says Mr. Headrick.
Bhim Asdhir, president and CEO of Excel Funds, will join the Sun Life Global Investments executive team, in addition to become a member of the integration planning committee and continue as the senior relationship manager for the capital’ sub-advisers and agents. (No changes to fund or staff lineups are announced at this time.)
Mr. Asdhir says Excel was financially secure as an independent fund supplier but Sun life’s supply system of 3300 advisers was what brought him to the deal and enables emerging market funds to reach a larger number of Canadians.
“The emerging market area is a large chance for Canadian investors and major players are only now looking at it,” says Mr. Asdhir. “Within the next five decades, this emerging market area will be a $100-billion chance … and during this [acquisition] Sun Life has taken a leadership position in this region.”
The deal is expected to close by the end of the fourth quarter of 2017, subject to regulatory acceptance.