Canada's Sun Life acquires US investment management firm Prime Advisors
01 July 2015
Canadian insurance giant Sun Life Financial Inc has agreed to acquire US investment management firm Prime Advisors Inc for an undisclosed sum, aiming to expand its institutional investment business in the US.
''The acquisition is part of Sun Life's strategy to broaden its asset management pillar by expanding and diversifying the capabilities of Sun Life Investment Management, which provides investment services to third parties and manages Sun Life's general account,'' the company said in a statement.
Financial details of the deal have not been disclosed.
This is the third deal this year for Sun Life, which is looking to strengthen its investment business.
About a fortnight ago, the company agreed to buy North American real estate manager Bentall Kennedy Group for C$560 million to expand its commercial property business. (See: Sun Life to acquire real estate investment firm Bentall Kennedy for C$560 mn).
Earlier in January, the insurance giant announced the acquisition of US asset manager Ryan Labs to reinforce its business with US pension funds and other institutional investors.
Redmond, Washington-based Prime Advisors is an investment advisory firm focused on bond portfolios for the insurance industry. Prime's assets as at the end of May were about $13 billion.
Sun Life's chief investment officer and president of its investment management unit Steve Peacher said, ''The addition of Prime together with our recently announced acquisition of Bentall Kennedy and completed acquisition of Ryan Labs Asset Management will grow Sun Life Investment Management's third-party assets under management to a combined C$50 billion in just over a year, and give us an excellent platform for serving institutional clients and expanding our business in the US."
''Sun Life shares our understanding of the unique needs of insurance companies and fixed income investors,'' said Don McDonald, president and chief executive officer of Prime Advisors.
The transaction is expected to close in the third quarter of 2015, subject to customary closing conditions.
Sun Life intends to fund the acquisition through cash in hand.
Upon completion of the transaction, Prime will operate as a separate unit of Sun Life Investment Management led by Don McDonald who will report to Steve Peacher. The company will retain its brand and offices in Redmond, Washington and Windsor, Connecticut.
Struggling with low interest rates, US insurers are outsourcing investment assets to third parties to cut costs and improve returns. It is estimated that $1.2 trillion of insurance assets in the US are outsourced, according to media reports.
Toronto-headquartered Sun Life Financial is one of the largest life insurance companies in the world, operating in a number of markets including India and Philippines. As of 31 March, the group's total assets under management were C$813 billion.
Its institutional investment management arm Sun Life Investment Management's combined assets under management is C$141 billion.
In India, the company operates since 1994 as Birla Sun Life Asset Management, a joint venture with Aditya Birla Group, managing one of the country's largest mutual funds, Birla Sun Life.
Berkshire Capital Securities LLC served as financial advisor to Sun Life on the deal.