Blackmont sale changes landscape

Advisors in the full-service brokerage are likely taking notice of the announcement of the sale of Blackmont Capital to Australian-based wealth giant Macquarie Group.

It was reported early Monday, Blackmont, which is an independent full-service brokerage firm with more than 130 investment advisors across Canada, will be purchased for $CAN93.3 million. The firm will now fall under the umbrella of Macquarie Group’s Banking and Financial Services Group, which globally manages more than $100 billion in assets.

The deal gives a very large global player an immediate and influential foothold into Canada’s full service brokerage business, which has tended to be dominated by the large Canadian banks.

Currently, Blackmont is one of the largest independent, full service investment dealers in Canada with approximately 450 employees. The firm also operates a 60 person capital markets division, which provides institutional and corporate clients with capital markets, advisory, equity research, sales and trading services, all of which will remain with CI Financial.

Blackmont will be re-branded Macquarie Private Wealth. The business will continue to be run by Blackmont CEO, Bruce Kagan while Macquarie executive director and former Head of Macquarie Full Service Broking, Earl Evans, will relocate to Canada and become president of the business.

Following the acquisition, Macquarie will have a broad-based business in Canada with total employee numbers approaching 1,000. The dealership is one of the final pieces to the firm’s Canadian business, giving it much needed retail distribution.

“Put simply, this transaction will enable us to deliver more to our people and clients. Macquarie brings to Blackmont a strong balance sheet, a commitment to growth, broad equity research and access to new products and proprietary deal flow. Their global knowledge and reach will help Blackmont advisors continue to set the new benchmark in terms of client service and offer more choice to the Canadian market,” Kagan says.

Blackmont advisor give the deal thumbs-up

There’s always the concern that when a dealer is bought, its assets don’t follow. That’s not the case for Sandra Pierce, a Blackmont investment advisor widely known as “Bay Street’s Bag Lady,” and senior vice president of the Fox Pierce Segal Group. Pierce says she’s ecstatic about the acquisition.

“I’m not just towing the party line when I say that. I know for certain I wouldn’t have been as happy with some other firms that were rumored to be interested in Blackmont,” she says. “Unlike some Americans firms – they don’t say, now you have to do things our way. They love us, and they want to buy our model as is – they are not imposing another model on us. I think it’s a testament that Bruce Kagan will still remain the CEO of the firm.”

Pierce is particularly impressed with the international scope of Macquarie’s operations.

“I think in this day and age to be owned by an international organization like Macquarie is very exciting. They are in China. They are in India. To me, being in those types of markets represents the future,” she says.

Pierce doesn’t expect there should be much difficulty in explaining the new ownership to clients. “I’ve been in business for 25 years. The name on my firm’s door has changed a couple of times. The most important thing in my mind to tell clients about the new owner is the safety of the company that buys us. Macquarie is the size of Bell Canada from that point of view,” she says. “My clients have never been married to the name of the firm – it’s about the advisors. It’s really been Dennis Fox, Sandra Pierce and Mike Segal, the Fox Pierce Segal Group. That’s what clients care about more than anything else.”

Pierce was also emphatic that she thought CI did a good job of running the business from an advisor perspective, but ultimately it appears Blackmont’s business model didn’t entirely fit with CI’s business objectives.

“When they bought us in 2007, they had a vision of how a brokerage firm could fit in. I loved CI, it’s one of the few companies I’ve seen where every person who works there seems to love the company. From the IT people to every level above that, it was always a can-do attitude to our requests,” she says “[In the end] I think it was business model that didn’t fit.”

CI’s strategy

As for CI, the sale does not signal the company’s intention to exit from the advisor dealership business. CI Financial acquired Blackmont as part of a broader $251-million takeover deal for Rockwater Capital in April 2007.

William Holland, the CEO of CI Financial says he remains committed to the retail financial advisor business.

“Macquarie will provide an excellent home with strong support for Blackmont’s retail advisors and foster the continued growth of their practices,” Holland says. “CI maintains a leading presence in the Canadian retail financial advisory business through Assante Wealth Management, one of Canada’s largest such firms with about 800 financial advisors. Meanwhile, Blackmont’s capital markets division remains a unique and important element in CI’s mix of businesses.”

Details of CI, Blackmont deal surface

(10/26/09)

Mark Noble