IGM Financial's asset management subsidiary, Mackenzie Financial, is poised to become the largest shareholder in China Asset Management Co. Ltd. (ChinaAMC) through a new C$1.15 billion deal. This strategic acquisition will give Mackenzie a 27.8% stake in ChinaAMC, more than doubling its current 13.9% ownership.
The share purchase agreement comes from Mackenzie's parent company, IGM Financial, which will obtain the additional shares from Power Corporation of Canada. As IGM's controlling shareholder, Power Corp aims to streamline holdings between its subsidiaries.
Under the terms of the deal, Mackenzie will consolidate the enlarged stake in ChinaAMC under its brand. IGM says this structure will optimize operations for both parties.
To help finance the transaction, IGM will divest 15.2 million shares in Great-West Lifeco, another Power Corp holding, to Power Financial Corporation. The share sale is expected to generate C$575 million.
Once completed, the deal will eliminate Power Corp's direct control of ChinaAMC, one of mainland China's biggest asset managers with RMB 1.61 trillion ($253 billion) in assets as of June 2021.
The transaction will reduce IGM’s interest in Great-West Lifeco from 4% to 2.4%, valued at nearly C$830 million. IGM will fund the remainder from existing capital resources.
With ChinaAMC’s reputation and reach firmly established, Mackenzie aims to leverage the relationship to expand its distribution footprint in the high-growth Chinese market. The deal is forecast to close within the first half of 2022, pending final approvals.