Mackenzie Financial and Great-West Lifeco have agreed to take a non-controlling stake in Northleaf Capital Partners, a Toronto-based private equity, private credit and infrastructure fund manager.
The companies will buy the stake through an acquisition vehicle that is 80% and 20% owned by Mackenzie – an IGM Financial subsidiary – and Lifeco, respectively.
The vehicle will take a 49.9% non-controlling voting interest and 70% economic interest in Northleaf.
The deal involves a $245m payment upon closing and contingent consideration at the completion of five years depending on performance.
It also includes future purchase provision of equity and voting interest in Northleaf.
Mackenzie, Lifeco, and Northleaf have struck a strategic relationship to expand private markets product capabilities across IGM’s and Lifeco’s distribution channels.
The alliance is said to expand Mackenzie’s abilities to offer global private equity, private credit and infrastructure investment offering via its retail advisory channels and financial institution distribution partners.
IGM and Lifeco plan to invest at least C$700m ($531.1m) in the coming 18 to 24 months across various Northleaf products.
The senior leadership of Northleaf will maintain a 50.1% voting interest in the business.
Northleaf’s investment decision making or investor relations activities will remain unchanged.
Great-West Lifeco president and CEO Paul Mahon said: “Northleaf’s leading capabilities in mid-market private equity, private credit and infrastructure equity will complement our existing investment teams, increase our invested asset diversification and provide opportunities for higher returns in our general account, while offering a broader opportunity set of investments for our clients.”
Northleaf has seven offices in Canada, the US, UK and Australia. Its staff headcount is over 150.
The business manages C$17bn in assets on behalf of institutional investors and HNWIs.
IGM anticipates the deal to add to its earnings in 2021.
The deal awaits regulatory nod, with completion expected in the final quarter of this year.
Mackenzie Investments president and CEO Barry McInerney said: “This transaction broadens the scope of our investment offering and enhances our asset management capabilities, particularly as our clients’ appetite for diversification continues to grow.
“There are many growth opportunities that Mackenzie and Northleaf are uniquely positioned to execute on, and we are looking forward to working together to develop new innovative investment products while continuing to champion the democratisation of alternative investments.”