Amvescap rebuffs CI

(July 6, 2005) Amvescap has confirmed that CI Fund Management has made a bid for all or part of the company in an apparent effort to acquire AIM Trimark, the company’s Toronto-based subsidiary. Amvescap rejected the bid, saying it “is not in the best interests of shareholders.”

Although Amvescap rejected the deal, reports suggest that CI is still interested in pursuing the company, and confirmed today that it has secured financing for the deal. Amvescap has more than $382 billion in assets under management compared to CI’s $49.2 billion in total managed assets. Acquiring AIM Trimark’s mutual fund operations would nearly double CI’s mutual fund assets.

Advisors might wonder what could happen under such a union. AIM Trimark is known for its efforts to communicate with and support the advisor channel both in person and through technological initiatives. The company is also regarded as an industry leader, particularly in the area of tax planning services. Arguably, AIM Trimark has a stronger brand and a better known culture among Canadian advisors.

On the flip side however, the company has experienced some turnover in investment management, losing names like Keith Graham and Bill Kanko. If CI’s bid for the company were successful, remaining managers might also be reconsidering where they fit into the lineup. CI already has hundreds of mutual funds, even after several years of actively merging funds with similar mandates.

To get AIM Trimark’s assets however, CI will likely need to reach a deal to buy the whole company, then sell off Amvescap’s foreign assets. “AIM Trimark is really their crown jewel,” says Dan Hallett, industry analyst and president of Dan Hallett & Associates. “I think that remains the strongest aspect of Amvescap business. For them to sell it outright at this point, I don’t think is something they want to do.”

He says Amvescap bought Trimark just in time, back in 1999 before the bear market. “Had they not done that, they probably would have suffered some pretty significant net redemptions. Amvescap, pre-Trimark, was very growth oriented. Buying them was a really good move and a good fit in terms of breadth of product, managers and the different styles at the two firms,” he says. “It would be my guess that they wouldn’t want to sell their strongest part unless they made some decision that they didn’t want to be in Canadian anymore, particularly if Trimark is getting the bulk of the sales. I don’t think you would want to sell off that portion until the other (growth) side of the business is a bit stronger.”

Rumours of Amvescap’s impending sale are not new in the industry. The company’s share price peaked after it purchased Trimark back in July 2000, then began to slide about a year later. More recently, company share prices have been weighed down by U.S. market timing sanctions.

As well, CI might not be alone in the running for the company’s assets if the investment management company is indeed in the market for a suitor. Reports suggest a number of companies including UBS or Franklin Templeton Investments might also be interested.

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