National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- BAR -- Exemption from the requirement to file a BAR under Part 8 of National Instrument 51-102 Continuous Disclosure Obligations -- The acquisition is non-significant applying the asset and investment tests; applying the profit or loss test produces an anomalous result because the significance of the acquisition under this test is disproportionate to its significance on an objective basis in comparison to the results of the other significance tests and all other business, commercial and financial factors; the Filer has provided additional measures that demonstrate the non-significance of the Acquisition to the Filer and that are generally consistent with the results when applying the asset and investment tests.
Applicable Legislative Provisions
National Instrument 51-102 Continuous Disclosure Obligations, s. 8.2(1) and Part 13.
July 30, 2019
IN THE MATTER OF THE SECURITIES LEGISLATION OF QUÉBEC AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF FIERA CAPITAL CORPORATION (the Filer)
The securities regulatory authority or regulator in each of the Jurisdictions (each a Decision Maker) has received an application (the Application) from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) granting relief pursuant to Part 13 of Regulation 51-102 respecting Continuous Disclosure Obligations (chapter V-1.1, r. 24) (Regulation 51-102) from the requirement in Part 8 of Regulation 51-102 to file a business acquisition report (a BAR) in connection with the Filer's acquisition of Integrated Asset Management Corp. (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the Autorité des marchés financiers is the principal regulator for this application;
(b) the Filer has provided notice that subsection 4.7(1) of Regulation 11-102 respecting Passport System (chapter V-1.1, r. 1) (Regulation 11-102) is intended to be relied upon in each of the provinces of Canada other than Ontario; and
(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Terms defined in Regulation 14-101 respecting Definitions (chapter V-1.1, r. 3) and Regulation 11-102 have the same meaning if used in this decision, unless otherwise defined herein.
This decision is based on the following facts represented by the Filer:
1. The head office of the Filer is located at 1981 McGill College Avenue, Suite 1500, Montreal, Québec H3A 0H5.
2. The Filer is a reporting issuer in all of the provinces of Canada and the Filer is not in default of securities legislation in any of the provinces of Canada.
3. The Filer's Class A subordinate voting shares (Filer Shares) are listed for trading on the Toronto Stock Exchange (TSX) under the ticker symbol "FSZ".
4. On July 3, 2019, the Filer announced that it had completed the acquisition of all of the common shares of Integrated Asset Management Corp. (the Acquired Business), a reporting issuer in the provinces of Alberta, British Columbia, Manitoba, Ontario, Québec and Saskatchewan (the Acquisition). The Acquired Business is a Canadian-based alternative asset management company, based in Toronto, that had 2.3 billion dollars in assets under management as at September 30, 2018.
5. The total consideration paid by the Filer for the Acquisition was $74 million, representing total enterprise value of the Acquired Business of $64 million and $10 million of adjusted cash. The consideration paid by Filer to the shareholders of the Acquired Business consisted of $55.5 million in cash and approximately $18.5 million in Filer Shares.
6. Under Part 8 of Regulation 51-102, the Filer is required to file a BAR for any completed acquisition that is determined to be a significant acquisition based on the acquisition satisfying any of the three significance tests set out in subsection 8.3(2) of Regulation 51-102.
7. For the purposes of completing its quantitative analysis of the "asset test", "investment test" and "profit or loss test", the Filer used the Acquired Business' financial statements and the Filer's financial statements which were prepared in accordance with International Financial Reporting Standards (IFRS).
8. The Acquisition is not a "significant acquisition" under the "asset test" as the consolidated assets of the Acquired Business as of September 30, 2018 represented approximately 2.0% of the consolidated assets of the Filer as of December 31, 2018.
9. The Acquisition is not a "significant acquisition" under the "investment test" as the total consideration paid for the Acquisition represents approximately 5.0% of the consolidated assets of the Filer as of December 31, 2018.
10. The Acquisition is a "significant acquisition" under the "profit or loss test" as the "specified profit or loss" (as calculated in accordance of paragraph 8.3(2)(c) of Regulation 51-102) of the Acquired Business exceeds 20% of the "specified profit or loss" of the Filer. As such, the Acquisition would represent a "significant acquisition" requiring the filing of a BAR under the "profit and loss test" of paragraph 8.3(2)(c) of Regulation 51-102.
11. The Acquisition would also represent a "significant acquisition" under the optional "profit or loss test" or the alternative applications available under subsections 8.3(3) and 8.3(4) of Regulation NI 51-102.
12. The application of the profit or loss test produces an anomalous result for the Filer because it exaggerates the significance of the Acquisition on an objective basis in comparison to the results of the asset and investment tests.
13. The Filer does not believe that that the Acquisition is significant from a commercial, business or financial perspective.
14. The Filer has provided the principal regulator with additional financial and operational measures, all of which are generally important metrics for the Filer and the industry in which it operates, which further demonstrate the insignificance of the Acquisition to the Filer. These additional financial and operational measures include total assets under management, total revenues and the market capitalization of the Acquired Business to that of the Filer and the results of those measures are generally consistent with the results of the "asset test" and the "investment test".
15. The Filer is of the view that the "asset test", the "investment test" and these additional financial and operational measures more accurately reflect the significance of the Acquisition to the Filer from a commercial, business and financial perspective.
Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.
The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted.