Vieira loses an early contributor with Desjardins' exit

Montreal asset management firm Fiera Capital is reportedly on the verge of losing a long-time shareholder while Desjardins Group wants to sell its stake.

Fiera announced on Wednesday that Desjardins wanted to divest itself of its stake, equivalent to 6.8% of the company's outstanding shares.

The shares owned by Desjardins have a different capital structure than the rest of the shareholders. The provisions of this structure give Fiera the right to make an initial offer to Desjardins.

The asset manager's management plans to submit such an offer to the financial cooperative with a financial partner. “There is no guarantee that this transaction will come to fruition,” the company said in a press release.

Analyst Graham Riding of TD Securities believes this is bad news. “Our first impression is that this is bad news. One of our major long-term shareholders and co-founder Jean-Guy Desjardins wants to sell.”

Desjardins has been a partner of Fiera from the beginning. In 2003, Desjardins sold its majority stake in Elantis to Jean-Guy Desjardins. This deal will mark the first chapter in the creation of Fiera. This allowed Mr. Desjardins to relaunch his business following the sale of TAL Global Asset Management to CIBC.

Desjardins Group did not specify the reasons behind its decision to sell Viera shares. The cooperative said it would not grant an interview on this topic. “As investors, we just applied our investment strategy,” answers Chantal Corbel, a spokeswoman for Desjardins.

Mr. Riding estimates Desjardins' stake is worth $55 million.

Fiera is going through tough times as its stock has lost nearly half its value since 2017. The departure of star portfolio manager Nadeem Riz in 2021 has raised concerns among investors who fear an exodus of clients.

RBC Capital Markets analyst Jeffrey Cowan also takes a dim view of the longtime partner's departure. He also questions whether Desjardins' divestment will have an impact on the funds Vieira manages on behalf of the Quebec cooperative.

Desjardins stresses that the deal does not raise questions about its business relationship with Vieira. “Fiera Capital remains an important business partner of Desjardins (the funds it manages for us),” Ms. Corbel explained in her email. “The sale of these shares does not call into question our business relationship with Fiera.”

The deal could have consequences for the control that Fiera's senior management exercises over the company, an RBC Capital Markets analyst asserts. The capital structure where Desjardins' shares are held holds Class B shares with founder Jean-Guy Desjardins and members of Viera's senior management.

Class A and Class B shares have the same weight with respect to voting rights, except for the election of directors. Class A shareholders elect one-third of the nine board members while Class B shareholders elect two-thirds.

Fiera shares lost 78 cents, or 10.26%, to $6.82 at the end of the session on the Toronto Stock Exchange.

Stephane Rolland, The Canadian Press