Dundee seen as potential buyer for stake in Cartier

(May 27, 2003) Dundee Wealth Management is being pegged as the most likely purchaser of a controlling stake in Cartier Partners Financial Group. However, one analyst believes Cartier will have difficulty finding a buyer, given the current investment climate.

“I maintain that Cartier won’t be easy to sell because many firms are already dealing with falling revenues and bottom-line losses,” says Dan Hallett, senior investment analyst at Sterling Mutuals, a rival fund dealer based in Windsor, Ontario. “However, if Cartier is sold, Dundee looks to be the most likely potential buyer.”

Last week, Cartier Capital announced it was selling its 66% stake in its fund dealer arm, Cartier Partners, after the Caisse de dépôt et placement du Québec, a Cartier investor, said it was pulling out to focus on projects in which it has a minority stake.

Hallett notes that Dundee has already established a relationship with the Caisse, having bought StrategicNova last year. “They’re smaller (less than 600 advisors) but we already know they’re prepared to buy a bigger player,” he adds, referring to Dundee’s failed bid to purchase IPC Financial Network, which collapsed last month amid regulatory problems.

Dundee vice-president Don Charter told the Globe and Mail the company would “obviously” be looking closely at Cartier, as part of Dundee’s commitment to expansion.

Among the other dealers, Hallett thinks Assante wouldn’t be interested, because most Cartier advisors are smaller producers. Besides, “Assante has already finished a big integration job and has been focusing more on diversifying into the less cyclical and higher margin business of sport and entertainment,” he adds.

FundEx is probably too small, Hallett says, as well as being a private company with no real ownership among its advisors. “Their flat-fee model simply doesn’t fit with Cartier’s percentage payout model. They’re just too different.”

One long-shot possibility is Berkshire, Hallett believes. “From the perspective of culture, they may be a decent fit,” he says. “However, a private company that only has a fraction of the number of advisors that Cartier has would be a huge task with respect to integration.”

Ruby, a participant in Advisor.ca’s Talvest Town Hall, also likes the prospect of a Cartier-Berkshire union. “They have a similar financial planning approach and the new stronger company will be a good player in a bank-dominated field,” she wrote in the online discussion forum. “Most of the planners at Cartier I know would fit well in the Berkshire model.”

An investment banker will be hired to solicit bids for Cartier. CEO Dan Richards told Advisor.ca they’ve already had interest from other firms, even before the official sale announcement. Richards expects an initial deal to be reached by the end of the summer.

Which firm do you think is most likely to buy Cartier? Join the discussion already underway in the “Free For All” forum of the Talvest Town Hall on Advisor.ca.

Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca