Fiera Capital 2017 Annual Report

New strategies, new geographies, new platforms and enhanced distribution channels offer Fiera Capital clients across North America, Europe and key markets in Asia access to customized multi-asset solutions. It’s all about investing globally and striving relentlessly to deliver any strategy to any client, anywhere.

Jean-Guy Desjardins - Chairman of the Board and CHief Executive Officer
Jean-Guy Desjardins
Chairman of the Board and Chief Executive Officer
Message from the Chairman of the Board
and Chief Executive Officer

Another Solid performance in 2017

Fiera Capital turned in another year of significant accomplishments in 2017. Thanks to the outstanding performance of its strategies and the added strength provided by Charlemagne Capital – which now forms the backbone of the European division – as well as the growth of new private alternative solutions, we continued to move forward in our quest to position the firm among the leading global asset managers, ultimately capable of providing solutions for any client, anywhere.

Read Mr. Desjardins’ full message to shareholders

Solid Financial Results

The firm remained on its strong growth path, with total assets under management increasing by a further 10% year-over-year to reach $128.9 billion, while revenues grew 33% to $459.1 million, reflecting gains achieved across all our divisions in 2017. Adjusted net earnings amounted to $94.2 million, up from $87.3 million the previous year.

The Board of Directors maintained the dividend policy with two dividend increases in 2017 – reflecting continued confidence in the firm’s growth potential. Since 2010, the compounded annual growth rate of our quarterly dividends has appreciated by 17.2%.

That confidence in Fiera Capital’s future prospects is evidently shared by the markets, judging from the response to a public offering completed in December 2017, which was significantly oversubscribed with total gross proceeds of $169 million.

Outstanding Investment Performance

Our ability to adapt the firm’s fixed income offering to changing market dynamics and to more effectively address the investment needs of clients also contributed to this landmark year. Indeed, 2017 saw Fiera Capital outperforming across most of its fixed income strategies despite a greater level of volatility within the asset class.

The firm’s Canadian equity strategies produced solid returns on both an absolute and relative basis. Likewise, the Global Equity Team’s high-quality bias continued to generate compelling results over the short, medium and long term, both in absolute terms and relative to their respective indices and industry peers.

Fiera Capital’s alternatives offering, which includes a growing number of real-asset solutions, generated strong absolute returns in 2017. These strategies represent highly attractive solutions that provide clients with the means to generate positive returns in all market environments. Faced with periods of volatility and potentially negative returns in traditional asset classes, our alternative strategies offer the possibility of preserving capital in down markets while maintaining a potentially attractive level of yield. This enables clients to achieve their investment objectives while generating strong revenues for our firm.

Operational Highlights

Pressing ahead with our global growth strategy in order to deliver value to clients and shareholders over the long term was a top priority in 2017. Over the course of a very eventful year, we transitioned the UK-based Charlemagne team to the Fiera Capital European division and completed the integration of our U.S. operations onto Fiera Capital’s platform. In the private alternatives space, we acquired the remaining interest in our ownership of Fiera Properties, further strengthened Fiera Infrastructure’s stature as a leading international investor, successfully launched the Fiera Comox agriculture strategy and witnessed Fiera Private Lending’s emergence as a leading Canadian non-bank lender.

Although the focus was on organic growth, late in the year we made a strategically interesting acquisition of a fast-growing, U.S.-based mutual fund that invests primarily in Asian emerging markets.

Then, subsequent to the year’s end, we further expanded our presence in Asia with the acquisition of Clearwater Capital Partners, a leading Asia-focused credit and special-situations investment firm headquartered in Hong Kong. We also reached an agreement to acquire the business of CGOV Asset Management, an Ontario-based investment management firm focused on high-net-worth and institutional investors with approximately $5.3 billion in assets under management.

Global Leadership Team

There were a number of changes to our global leadership team in 2017. In November 2017, Vincent Duhamel, who previously headed prominent investment-management organizations in Canada and Asia, joined Fiera Capital as Global President and Chief Operating Officer. Vincent is also a member of the firm’s Global Executive Management Committee and the Strategic Development Committee and sits on the internal boards of Fiera Capital’s Canadian, U.S., European and Bel Air Investment Advisors divisions. Earlier in 2017, we welcomed Monique F. Leroux, President and CEO of the Desjardins Group from 2008 until 2016, who joined Fiera Capital as Strategic Advisor to the senior leadership team and a member of the Strategic Development Committee; Jean-Philippe Lemay, formerly the Canadian division’s Chief Investment Officer (CIO), was appointed President and Chief Operating Officer of the Canadian division; David Sadkin succeeded Todd M. Morgan as President of Bel Air Investment Advisors; and François Bourdon assumed the role of Global Chief Investment Officer, while retaining responsibility for managing a number of investment strategies for the Canadian division. During that same time period, John Valentini assumed additional responsibilities with his appointment as Executive Vice President and Global Chief Financial Officer of Fiera Capital and President of the Private Alternative Investments division.

The fact that these senior-level appointments involved both the promotion of top-flight Fiera Capital talent and the on-boarding of highly regarded executives from outside reflects positively on the firm’s succession planning, as well as its reputation in the investment community.

During 2017, the firm concluded long-term compensation agreements with a number of key investment professionals, designed to help ensure alignment of interests and secure continued growth in revenues and the development of new strategies.

We believe these investments in attracting, developing and retaining world-class talent have made the organization stronger and will contribute to accelerated organic growth in revenues, which will in turn help us achieve our objective of $200 billion in AUM by the end of 2020 and deliver value to shareholders.

Seven-Year Global Financial Forecast

In keeping with our focus on the longer term, I am proud to note that Fiera Capital published its first Global Financial Forecast in 2017. This comprehensive report is a tangible example of our ability to generate high-calibre market intelligence that helps drive innovative and attractive portfolio solutions for our clients. The Global Financial Forecast outlines trends that are likely to influence and characterize the global investment environment over the next seven years (2017–2024), along with factors we believe will affect financial markets going forward.

2022 Strategic Plan

As 2017 unfolded, we also initiated an ambitious strategic-planning exercise designed to help us determine the best path forward for the next five years and thus ensure Fiera Capital’s continued growth and success. To that end, our 2022 Strategic Plan will aim not only to develop a consensus regarding market trends, potential disruptors, challenges and opportunities, but will also enable us to identify key strategic objectives and develop action plans focused on the most attractive opportunities. This is another example of investing in our future. The 2022 Strategic Plan is on track to be finalized during the third quarter of 2018.

Responsible Investing and Corporate Social Responsibility

As a responsible steward of capital with global aspirations, Fiera Capital acts diligently and in the best interests of investors and stakeholders with a view to mitigating risks and creating sustainable, long-term value. Our firm has long been committed to good governance and responsible investing. In fact, back in 2009 we were one of the early signatories to the United Nations Principles for Responsible Investment (UN PRI). However, the rapid growth and diversification of Fiera Capital in recent years demonstrated the need for a comprehensive responsible investment policy that would enable us to coordinate practices across the organization. In 2017, we formed a multidisciplinary committee and tasked it with carrying out a sweeping review of related environmental, social and governance policies and procedures.

Elsewhere in this report you can read about the successful outcome of the committee’s efforts, which yielded Fiera Capital’s new Global Responsible Investment Policy along with an updated Proxy Voting Policy and numerous other initiatives designed to embed corporate social responsibility throughout the firm.

Acknowledgements

I would like to take this opportunity to express my gratitude to fellow Board members for their wise counsel and support over the course of a highly successful year, and to formally welcome Nitin Kumbhani, Vice Chairman and Chief of Growth Equity Securities at Fiera Capital, U.S. division, who joined the Board in June 2017. Mr. Kumbhani replaced David Pennycook, who has been with the organization for more than 26 years and who made valuable contributions to the firm’s success as a member of the boards of both Fiera Capital and its predecessor, Sceptre Investment Counsel Limited.

Last but not least, I wish to thank the managers, investment teams and employees across the organization for the passion and hard work that helps us drive the firm forward.

As Fiera Capital approaches its 15th anniversary later this year, we remain committed to providing clients with the innovative strategies and true-alpha portfolio management that have differentiated us from other asset managers from the very start and, of course, to continuing to reward our shareholders.

Signature - Jean-Guy Desjardins
Jean-Guy Desjardins
Chairman of the Board
and Chief Executive Officer
$128.9B
In Assets Entrusted
to Fiera Capital on behalf
of Clients
10%
Year-over-year
Aum Increase
33%
Increase
in Total Revenues
9%
Year-over-year Increase
in Adjusted Ebitda
$11.2B
In New Mandates Won

New Members of the global leadership team

Vincent Duhamel

Vincent Duhamel Global President and Chief Operating Officer

Vincent Duhamel has led several prominent investment-management organizations in Asia and Canada. Prior to joining Fiera Capital, he held the role of Capital Partner and Chief Executive Asia at private bank Lombard Odier & Co. He previously served as CEO of hedge-fund sponsor SAIL Advisors Ltd., and as Managing Director of Goldman-Sachs in Hong Kong.

Monique F. Leroux

Monique F. Leroux Strategic Advisor and Member of the Strategic Development Committee

Monique F. Leroux previously served as President and CEO of the Desjardins Group. She is currently Chair of the Board of Investment Quebec and sits on numerous other non-profit and corporate boards, including Bell, Couche-Tard, Michelin and S&P Global. Ms. Leroux is a Member of the Order of Canada, an Officer of the Order of Quebec and a Knight of France’s Légion d’honneur.

François Bourdon

François Bourdon Global Chief Investment Officer

François Bourdon has more than 20 years’ experience in the investment industry and has been with Fiera Capital since its inception. In addition to his duties as Global Chief Investment Officer, he continues to manage a number of investment strategies for the Canadian division, and frequently serves as the firm’s spokesperson on economic and investment strategy matters.

Jean-Philippe Lemay

Jean-Philippe Lemay President and Chief Operating Officer, Canadian Division

Prior to assuming his current position, Jean-Philippe Lemay served as Chief Investment Officer of Fiera Capital’s Canadian division and as Vice President and Senior Portfolio Manager of Liability Driven Investments. An actuary by training, he joined the firm in 2010 after stints as Specialist - Quantitative Research and Risk Management, and Index Manager at other Canadian investment-management firms.

David Sadkin

David Sadkin President, Bel Air Investment Advisors LLC

In addition to his role as President, Bel Air Investment Advisors LLC (a U.S. subsidiary of the firm), David Sadkin is responsible for advising individuals, families, endowments and foundations. A graduate of Harvard Law School, he began his career in Washington, DC, serving as counsel to the House of Representatives Committee on Government Reform and, subsequently, as senior counsel to Rep. Henry A. Waxman. David joined Bel Air in 2006.