Canadian asset manager IGM Financial Inc.’s deal for a minority stake in Rockefeller Capital Management is a key moment in its strategy to be a “bigger force” in serving rich investors, its chief executive officer said. 

IGM, which is controlled by the Desmarais family of Quebec, snapped up a 20.5% interest in Rockefeller that values the New York-based firm at $3 billion. It’s a deal that unites two financial families that are steeped in tradition: Rockefeller Capital’s roots go back to the 1880s, when John D. Rockefeller established a family office.

“This is very much a strategic investment,” IGM CEO James O’Sullivan said in an interview Tuesday. “We’ve articulated in the past a strong desire to be a bigger force in high net worth and ultra-high-net-worth client segment.” O’Sullivan and Andre Desmarais will join Rockefeller’s board. 

IGM is an established financial adviser and asset manager to Canada’s middle class and mass affluent through its IG Wealth Management and Mackenzie Investments divisions. But those businesses are under pressure from lower-cost options for individual investors such as exchange-traded funds. 

So the Winnipeg, Manitoba-based company has assembled a portfolio of other investments — including 28% of fund manager China Asset Management Co. and stakes in online brokerage Wealthsimple, private equity firm Northleaf Capital and ESG-focused boutique Greenchip Financial. Rockefeller is the latest. 

Rockefeller was approached by the Canadian firm a year ago and began discussions in the fall, Chief Executive Officer Greg Fleming said. “We did this with the Desmarais family and IGM because there’s a lot of bases upon which the fit is really good,” he said in an interview. The firm had more than $100 billion in client assets at the end of March and 44 offices across the US. 

IGM fell 0.8% to C$39.89 as of 11:34 a.m. in Toronto. The shares are up more than 5% this year. 

To help pay for the deal, IGM agreed to sell Investment Planning Counsel to sister company Canada Life for C$575 million ($428 million). 

What Bloomberg Intelligence Says
Bloomberg Intelligence analysts Ethan Kaye and Paul Gulberg said in a statement:

“IGM’s $622 million purchase of a 20.5% stake in US wealth manager Rockefeller Capital at roughly 3% of managed assets, and simultaneous sale of Investment Planning Counsel at 2%, positions it for additional growth opportunities. The deal marks IGM’s entrance into the faster-growing, more-robust US market, following CI Financial’s effort there, and could advance its high-net-worth initiative.” 

This article was provided by Bloomberg News.