B2B Trust buys Mackenzie’s MRS Companies

Mackenzie Financial has struck a pair of deals with Laurentian Bank, selling off its M.R.S. Trust Company and M.R.S. Inc. and bulking up its distribution network.

Under the first deal, Mackenzie is selling its the MRS Companies to Laurentian subsidiary B2B Trust. The companies will be folded into the B2B brand, and the combined entity will serve more than 22,000 advisors.

“Both MRS and B2B Trust are dedicated to the Canadian financial advisor community, and the integration of our two firms will create a best-in-class provider of products and services specialized for this market,” said François Desjardins, president and CEO of B2B Trust.

“Combining B2B Trust’s strong positioning in loans and deposit products with MRS’s strength in self-directed products and account administration provides financial advisors with an even stronger business partner.”

The deal includes about $165 million in cash, with B2B Trust repaying an additional $20 million in subordinated debt to Mackenzie. The transaction is expected to close in November 2011 subject to applicable regulatory notifications and approvals.

M.R.S. Trust Company provides deposit and lending products, while M.R.S. Inc. and its wholly-owned subsidiaries, M.R.S. Securities Services Inc. and M.R.S. Correspondent Corporation, provide account administration services to over 135 dealer firms and over 14,000 financial advisors. Total assets under administration are approximately $21.5 billion with more than 280,000 investor accounts placed through financial advisors.

B2B Trust offers an array of banking products, including investment and RSP loans, deposits, investment accounts and residential mortgages. B2B Trust’s loan and deposit portfolios total $5 billion and $9 billion, respectively.

“The combination of these two well-established companies—whose complementary products are built on a similar advisor-focused business model—is a natural fit,” said Charles R. Sims, president and CEO of Mackenzie Financial Corporation. “At the same time, the sale of MRS allows Mackenzie Investments to focus all its resources on our core business of investment management.”

Now is as good a time as any to focus the company’s energy on investments, as a related deal could see a substantial increase in Mackenzie’s assets under management.

B2B Trust’s corporate parent, Laurentian Bank, also announced a new distribution agreement with Mackenzie, under which the bank would offer a preferred series of Mackenzie funds in its branches as of the beginning of 2012.

Laurentian says the transaction should generate growing fee-based revenues as progressively higher volumes of net funds are accumulated over the years. The downside for Laurentian is that it will have to pay a $7.6 million termination penalty to Industrial Alliance, with which it has an existing distribution agreement for IA Clarington Funds.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.