AIC spins out two new companies

AIC Limited and its Berkshire Group subsidiary have each spun out a new company to specialize in structured products.

The two companies — Copernican Capital and Markland Street — are currently in the IPO stages of launching new products for retail clients.

Copernican first announced its plans to launch the Copernican World Banks Income and Growth Trust late last month when it filed a preliminary prospectus on January 27. On the same day, Markland Street broke with AIC’s tradition of avoiding energy related products when it launched its initial public offering of the Oil Sands Sector Fund.

“It makes sense to spin out a company to do structured products. On the surface, what doesn’t make a lot of sense to me at the moment is why they’re actually spinning out two separate companies for two types of structured products,” says Dan Hallett, president of research firm Dan Hallett & Associates.

“I can only guess at this point that they’re trying to diversify their lines of business. That makes sense for them,” the analyst adds. “The only thing I wonder is whether they are a bit late to the game with this. Structured products are still in favour, but for how much longer will they be able to spin out new products? This is a three, four, five year old trend of people loving these products.”

In recent years, the banks, along with fund companies such as Clarington, Mackenzie, CI Investments and VenGrowth Capital Partners have all been actively involved in creating a lineup of structured and yield oriented products.

It’s not yet known what the business relationships between AIC, Berkshire and Markland Street will look like but sources call the arrangement “complicated.” Neither Chris Lowe, CEO of Copernican, nor Sean Robitaille, Markland Street president and chief executive officer, were immediately available for comment.

However, the list of directors and executives at the two new companies is veritable who’s who of core AIC talent. Along with Lowe, AIC’s senior vice president and manager of seven different funds, the list at Copernican includes new chair, Jonathan Wellum, who manages nine funds while serving as AIC’s chief investment officer; Vicki Ringelberg, who will serve as chief financial officer for both AIC and Copernican, and John Miller, who will be executive vice president at both companies.

The lineup at Markland includes Glenn Pittman who worked as AIC’s national sales manager before leaving suddenly in March 2004 to work at Connor, Clark & Lunn Capital Markets; Berkshire’s COO and CFO Frank Laferriere is now serving as Markland’s CFO as well; and managing directors Robert Levis and Jeff Wheeler both come from the TWC Group of Companies, which was taken over by Berkshire in November 2003.

The first Copernican product actively invests in a portfolio of bank shares from around the world in what appears to be a closed-end reflection of AIC’s existing financial services investment mandates. The Oil Sands Trust, meanwhile, is managed by Markland Street Asset Management with investment advisory and portfolio management services being provided by AGF Funds.

Filed by Kate McCaffery Advisor.ca, kate.mccaffery@advisor.rogers.com