The potential consolidation of Toronto's mutual fund industry may have a profound impact on Sea-mark Asset Management Ltd., a fading star of Atlantic Canada's fledgling investment management industry.
A key source of revenue for Halifax-based Seamark is Clarington Corp., the subject of an unsolicited $254-million takeover by larger rival CI Fund Management. It's estimated that about one-third of Seamark's $10.2-billion in assets under management is derived from the Toronto-based fund distribution company.
Seamark helped build Clarington in the late 1990s via management of its conservative, income-generating offerings. As of June 30, Seamark managed 12 Clarington funds, including the $946-million Clarington Canadian Income Fund.
If CI's takeover offer succeeds, that management relationship could end. In its statement yesterday, Toronto-based CI said "Clarington unitholders will benefit from significant management fee reductions within 12 months as Clarington funds are aligned with the lower costs structure of existing CI funds."
Bay Street's conclusion? CI will say good-bye to Seamark, and hand over Clarington fund management duties to CI's own investment team.
Concern that Seamark might cut its $1.04 annual dividend sent shares spiralling down $2.30 or 18 per cent to $10.15 yesterday on the Toronto Stock Exchange. One year ago, shares traded in the $22 range.
It's the latest bad news for Seamark. Last week, the company said clients are leaving the firm. As of Sept. 30, assets under management fell to $10.2-billion from $10.7-billion in 2004. A headhunting effort continues to find a new president to help stem the flow of assets.
Seamark management did not return telephone calls yesterday.
© 2007 The Globe and Mail. All rights reserved.
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