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CI Financial acquires Hartford's Canadian arm

INVESTMENT FUNDS REPORTER

CI Financial Corp. has struck a deal to buy Hartford Investments from its U.S. insurance company parent, a move that could be the seed for future business relationships.

"We have two companies active in the wealth management business, and opportunities might arise," CI's chief executive officer Stephen MacPhail said Thursday.

CI, Canada's third-largest fund company, agreed to buy the Hartford Financial Services Group's Canadian fund arm, which has $1.8-billion in assets. The deal, which is set to close in December, will boost CI's retail assets to $68.4-billion. Terms of the transaction were not disclosed.

David Levenson, president of the Hartford's wealth management arm, said the divestiture would allow the firm to focus on its core U.S. operations.

Hartford Investments started in 2000, but didn't gain traction until external managers such as Bill Kanko and Richard Jenkins of Blackcreek Investment Management Inc. signed on. The pair helped build up the Trimark mutual fund brand in Canada in the 1990s.

"We haven't asked assurance that they [Blackcreek managers] are going to stay onboard, but from what we understand they would be quite optimistic about working with the likes of CI," Mr. MacPhail said.

The acquisition of Hartford Investments was also possible because its parent and CI have had good relationships with U.S. brokerage firm Edward Jones & Co., Mr. MacPhail said. The Canadian arm of Edward Jones is responsible for a good chunk of Hartford Investment's mutual fund sales.

Barclays Capital analyst John Aiken described the latest acquisition by CI as "positive," and suggested that negotiations with Hartford could "signal the start of an ongoing relationship with CI that could lead to incremental mandates or even distribution coming out of the insurer's U.S. operations."

CI (CIX)

Close: $21.30, down 16¢

Hartford (HIG)

Close: $24.20 (U.S.), up 46¢

© 2007 The Globe and Mail. All rights reserved.

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