Great-West Lifeco Inc., parent company of Canada Life, announced Aug. 4 that an agreement has been reached to sell its subsidiary, GLC Asset Management Group Ltd. to Mackenzie Financial Corporation. Both GWL and Mackenzie are owned by Power Corporation.
Under the terms of this deal, Lifeco will receive cash consideration of $175 million for the sale of GLC and Canada Life will acquire the fund management contracts relating to the Quadrus Group of Funds and other Canada Life branded investment funds from Mackenzie for $30 million. The result is that Lifeco will receive net cash consideration of $145 million.
"This transaction supports Canada Life's strategic objectives of strengthening and growing its Canadian wealth management business. It leverages an already established and strong working relationship between our companies. By working together, we will have access to Mackenzie's at scale investment management capability, while retaining control of our overall Canadian wealth management strategy, including our product shelf and solutions for our customers," said Paul Mahon, President and Chief Executive Officer, Great-West Lifeco. "This access to industry-leading investment management capabilities will support strong distribution channels in both our Individual and Group businesses and benefit our customers."
Canada Life establishing its own fund management company
Lifeco added that Canada Life is also in the process of establishing its own fund management company, Canada Life Investment Management Limited (CLIML). Subject to obtaining registrations and other regulatory approvals, CLIML is expected to begin operations in Q4 2020. It will assume fund management responsibilities for the Quadrus Group of Funds and other Canada Life-branded investment funds in 2021.
Long-term distribution agreement
Lifeco says CLIML will enter into a long-term administration agreement with Mackenzie and Canada Life, and CLIML and Canada Life will also enter into a long-term distribution agreement with Mackenzie to provide them with access to Mackenzie's investment management services at preferred rates.
"As a result of this expanded relationship, we'll be in a position to offer more diverse and unique products and solutions to both Mackenzie and Canada Life clients, building upon our multi-boutique and multi-asset class structure and approach," said Barry McInerney, President & CEO, Mackenzie Investments. "This agreement also solidifies Mackenzie's presence in the very important and growing group retirement market, where Canada Life is a leading provider and offers employee benefits and retirement services to millions of Canadians."
Canada Life's Canadian investment subsidiary, GWL Realty Advisors Inc., is not included in this transaction.
