After a period of rapid growth, Canada’s exchange traded fund industry is starting to see some consolidation.
Claymore Investments, Inc., the manager of the Claymore family of ETFs and closed-end funds, said Wedensday that BlackRock, Inc. has entered into a definitive agreement with subsidiaries of Guggenheim Partners, LLC to acquire all of Guggenheim’s interest in Claymore Canada.
The deal will augment New York-based BlackRock’s roster of investment fund products and deepen BlackRock’s footprint in Canada. BlackRock manages the iShares family of exchange tranded funds, as well as separate accounts, mutual funds and other pooled investment vehicles.
“We started Claymore Investments with the idea of truly driving change and improvement in Canada, and I am proud of the impact we have had on the Canadian investment landscape,” said Som Seif, president and CEO of Claymore, in a release.
“Advisors and investors have embraced our products as valuable components of their investment portfolios and we believe inclusion in the iShares family is sure to increase their popularity.”
“This transaction brings together two innovative investment fund providers and creates an unparalleled opportunity to serve our Canadian clients,” said Bill Chinery, head of BlackRock Canada. “Claymore Canada brings a complementary set of ETFs to the world-class iShares range of products and enhances our ability to compete against other investment fund providers in Canada.”
Valley Forge, Pennsylvania-based investment management giant The Vanguard Group set up shop in Canada last year. An initial line-up of six ETFs offered by Vanguard Investments Canada Inc. began trading on the Toronto Stock Exchange in December.
At Dec. 31, 2011, BlackRock offered 48 ETFs in Canada under the iShares brand, representing $29.0 billion in assets under management and Claymore Canada offered 34 ETFs and two closed-end funds representing $6.9 billion in AUM.
The deal is subject to regulatory and other approvals, including the approval of securityholders of each of the Claymore Canada ETFs and closed-end funds. Claymore Canada will call and hold a combined special meeting of securityholders to consider the transaction. The special meeting is expected to be held in late February or early March. If approved, the deal is expected to close by the end of the first quarter of 2012.
Deal underscores the “enormous potential” global players see Canada’s ETF industry
Howard Atkinson, president of Horizons ETFs Inc. – another major ETF industry player – said BlackRock’s acquisition of Claymore reflects the increasingly global nature of the ETF business, and demonstrates the “enormous potential” that global players see in the Canadian ETF industry.
“At Horizons ETFs we understand the need to get bigger quickly in the ETF space,” Atkinson said. “That’s why we were compelled to join the Mirae Asset Group of companies in an acquisition in 2011 that helped create a global ETF company. Both the scope and the size of the ETF industry is truly global, which is why it’s necessary to have a global franchise that has the resources to help you compete on a global scale.”
Atkinson added that he doesn’t expect BlackRock’s acquisition of Claymore to have a drastic impact on the ability of Horizons ETFs to grow its current market position.