September 03, 2018

TDAM to acquire Greystone

Plan sponsors may wish to consider whether this investment news has any implications for the investment options available within their plans. Sun Life Assurance Company of Canada purchases units of the funds listed below, which are established as segregated funds in accordance with the Insurance Companies Act (Canada).

In July 2018, TD Asset Management ("TDAM") announced that its parent company, Toronto-Dominion Bank ("TD") and Greystone Capital Management Inc. ("GCMI"), parent company of Greystone Managed Investments Inc. ("Greystone") have signed an agreement under which GCMI will be acquired by TD for approximately $792 million, subject to regulatory approval.

Both TDAM and Greystone are investment managers on our core investment platform.

Greystone manages approximately $36 billion in assets under management across a broad range of asset classes, including alternative asset classes like real estate, infrastructure and mortgages. Greystone is primarily owned by its employees, with the remaining ownership stake held by other institutional investors. TD is expected to acquire 100% of GCMI.

Following the completion of the transaction, Greystone will operate and serve clients under the name TD Greystone Asset Management ("TD Greystone"). TDAM has indicated that Greystone will continue to operate independently out of their headquarters in Regina, Saskatchewan. Robert Vanderhooft, CEO/CIO of Greystone, will report into Bruce Cooper, CEO/CIO of TDAM. Non-investment functions such as Human Resources, IT, Sales and Finance will report into various areas within TD.

Upon close of the transaction, all employee-owners will receive payouts in cash of 50% to 70% of the transaction value, with the remaining amount to be paid in TD shares that will vest in two years. A few key employees will receive additional retention packages that will incentivize them to remain with TD Greystone over the next five years. 

The acquisition allows TDAM to expand its presence within certain alternative asset classes (e.g. real estate, infrastructure and mortgages), where Greystone has had success and significant growth over the years. At the same time, the transaction gives Greystone access to TDAM's broader distribution channels, such as high net worth and retail clients, where the firm had not developed a meaningful presence. 

TD has indicated that there are no current plans to terminate Greystone employees or eliminate any of their strategies, but there is overlap with TDAM in several asset classes, including Canadian Equity and Canadian Fixed Income. We expect that there may be some degree of rationalization of funds in these categories, as strategic priorities are set over the next 12 to 24 months.

Overall, we believe that both companies will benefit from the transaction. The impact upon specific Greystone strategies that are part of the Sun Life Financial core investment platform is uncertain at this time and we have therefore placed all Greystone funds under Additional Monitoring as part of our Watch List. In the coming months, as the transaction closes and TD's intentions for the Greystone suite of funds become clearer, the Sun Life GRS Investment Solutions team will evaluate how the transaction impacts specific funds. Over the longer term we will also assess the impact of the transaction on Greystone's culture and ability to attract and retain high quality personnel, as well as Greystone's investment process and style.

Please contact your Sun Life Financial Group Retirement Services representative.