Scotiabank has agreed to acquire Jarislowsky Fraser, an independent investment firm with more than C$40bn in assets under management in Canada, for C$950m ($755.46m).

The deal will create the third-largest fund manager in Canada with C$166bn in assets under management, trailing only Royal Bank of Canada and Toronto-Dominion Bank.

Scotiabank said it will pay the purchase price mostly by issuing new shares. Under the agreement, Jarislowsky Fraser’s partners can earn additional C$56m in stock if the firm achieve growth targets.

Scotiabank president and CEO Brian Porter said: “This transaction aligns with our strategic commitment to diversify our global wealth management business by building out a platform of rigorous, process‐driven investment capabilities for institutional investors across our footprint in Canada and the Pacific Alliance.

“The acquisition also enhances Scotiabank’s ability to serve the banking, estate, and trust needs of high net worth families who are the clients of Jarislowsky Fraser.”

The deal, which has received support of all partners of Jarislowsky Fraser, is expected to close in third quarter of fiscal year 2018, subject to regulatory approvals.

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Stephen Jarislowsky, founder of Jarislowsky Fraser, will continue his association with the business that will continue to carry his name and retain investment autonomy.