Aston Hill Financial and Front Street Capital have entered into an agreement to club their respective companies to create a new independent asset management firm with $3.1bn in asset under management (AUM).
Incorporated in 2001, Aston Hill has $2.7bn in total AUM. The Toronto-based firm manages portfolios for institutional investors, provides portfolio advisory services and offers mutual funds.
Front Street, which was also founded in 2001, is an investment management firm with nearly $879m in AUM. It offers a range of investments, including growth, income and tax-minded portfolios offered as mutual funds and hedge funds.
Following the deal, the combined firm will be led by new CEO Joe Canavan, who will replace interim CEO James Werry.
Canavan was the former chairman and CEO of Assante Wealth Management and United Financial Corporation respectively. He also served as CEO of Synergy Asset Management, a company he founded in 1997. Most recently, he served as the interim CEO of the Children's Aid Foundation.
Canavan said: "The combination of Aston Hill and Front Street creates an asset management platform with an attractive product mix and a talented team known for delivering exceptional client service. This Transaction positions the combined company for future growth as a leading intermediate independent asset management company and strong alternative to bank owned asset managers.
“I am excited to work with Nevin Markwart, Frank Mersch, Norm Lamarche and the combined group of operational, sales and investment professionals. It promises to be an exceptional team.”
The company also announced that its CIO Ben Cheng will take a leave of absence with immediate effect and will cease to be involved in investment management activities for Aston Hill funds.
His portfolios will now be managed by firm’s investment managers Sandy Liang CFA and Barry Morrison CFA.
Liang, who has over two decades of experience in credit and equity investments to the funds, joined Aston Hill in 2011. Prior to Aston Hill, he worked at BMO Capital, Scotia Capital and New York based hedge fund Cobalt Capital.
Morrison joined Aston Hill when his investment management firm Morrison Williams was acquired by Aston Hill in 2011. Prior to Morrison Williams, he held senior roles at BGH Investment Management and Dominion Life Assurance.
Under the deal, current Front Street partners will receive 120 million Aston Hill common shares. The current Front Street partners will own nearly 46% and the current Aston Hill shareholders will own 41% in the combined firm.
Aston Hill chairman of the board of directors Eldon Smith said: "Front Street has proven itself to be a trusted investment manager across a diverse range of investment alternatives. This Transaction leverages the strengths of both companies to create a significant independent investment management firm."
Front Street president and CEO Nevin Markwart said: "This Transaction enhances the ability of the combined company to deliver investment performance and client service.
"This combination brings together best-in-class portfolio management expertise with each firm's commitment to foster intimate relationships with investors and advisors. Our new corporate profile, highlighted by the proven leadership of Joe Canavan, strengthens our ability to meet client goals."
The deal, which is expected to close by the end of 2016, is subject to a number of conditions precedent including the approval of Aston Hill shareholders and debentureholders.