DundeeWealth took heavy hit when it disposed of Quebec operationsBy Donna Glasgow | May 26 2009 08:06PM
Back in November when DundeeWealth Inc. first announced that it was selling its Quebec network of mutual fund and insurance financial advisors to Industrial Alliance, it did not mention the price tag. However, the Company's Management's Discussion and Analysis (MD&A) posted last month on the SEDAR website, revealed that DundeeWealth took a major hit on this divestiture.
In the MD&A, DundeeWealth reports that it was paid $12.7 million in cash consideration for the Quebec operations. "Included with the assets disposed of was goodwill and other intangible assets of $28.9 million which had been assigned to these operations when they were acquired in 2003. The disposition resulted in a net loss of $17.7 million," explains the document.
The transaction, which was completed on Dec. 31, 2008, involved approximately 340 mutual fund only licensed financial advisors with approximately $2.6 billion in assets under administration and approximately 70 additional insurance only advisors.
DundeeWealth continues to operate in Quebec through all of its other business units, including the mutual fund and investment management operations of Dynamic Funds and Goodman Private Wealth Management and the capital markets and financial advisory business conducted through its investment dealer platform, Dundee Securities Corporation.
The MD&A states that the sale was a "decision taken as part of our overall review and subsequent reorganization in 2008... The sale furthered the important goal of improving margins in the financial advisory business."
In 2008, DundeeWealth incurred a net loss from continuing operations of $186.8 million compared to net earnings of $87.5 million for continuing operations in 2007.