(Bloomberg) -- Canadian asset manager Fiera Capital Corp. is losing a C$5.5 billion ($4 billion) mandate as another fund manager ends an advisory deal with the firm. The shares tumbled.
Fiera announced Friday that Canoe Financial LP will end an arrangement that involves both Fiera and PineStone Asset Management, a firm run by Nadim Rizk, formerly a star money manager at Fiera.
Starting in January, Canoe will deal directly with PineStone to get the services of Rizk and his team on a C$5.5 billion, four-fund mandate — cutting Fiera out of the loop.
In 2019, Canoe purchased the funds from Fiera, and arranged to keep Rizk on as portfolio manager.
PineStone now directly sub-advises an international equity fund for Canoe, which has been a positive experience, said Darren Cabral, senior vice-president and head of marketing strategy and innovation at Canoe.
“We felt comfortable moving the entirety of the relationship over to PineStone and simplifying our portfolio management structure, which is ultimately the main objective here — just keep it simple,” he said.
Fiera remains Canoe’s sub-adviser on a global private equity fund, and “they are a tremendous partner and provide excellent service,” Cabral added.
Shares of Fiera were down 11% to C$9.71 as of 3:38 p.m. Toronto time.
The Canoe termination continues a string of asset outflows that followed Rizk’s departure from Fiera to start PineStone in 2021. Rizk had managed more than C$50 billion for Fiera in multiple equity strategies, with the US one generating an annualized return of more than 18% from inception in 2009 to June 30 of this year.
Jean-Guy Desjardins, founder and chief executive officer of Montreal-based Fiera Capital, said during an interview in February that Rizk had become a “source of stress” as he sought to create his own business. A Fiera competitor could have recruited him — and his clients.
So instead, Fiera brokered a deal with Rizk that sees him managing equity strategies within PineStone, working out of the same office building as Fiera.
But some clients such as National Bank of Canada that were accessing Rizk’s money-management services through Fiera are now opting to deal directly with him. Canoe is about to join that list.
Fiera’s outflows to PineStone totaled C$13.4 billion as of Sept. 30, according to financial statements — the equivalent of 8% of Fiera’s C$166 billion in assets under management on the same date.
Canoe’s C$5.5 billion mandate accounted for 12% of the assets sub-advised by PineStone.
“Fiera Capital is executing its organic growth strategy and is confident in its ability to mitigate this AUM reduction and maintain consistent financial performance throughout 2025,” the company said in a news release.
“Our pipeline remains promising with significant mandates expected to fund in the next few months,” CEO Desjardins said in a conference call with analysts Thursday.
Nik Priebe, an analyst with CIBC Capital Markets, said investor sentiment around Fiera should improve if outflows abate and investor attention shifts to the firm’s more promising areas, such as its growth in managing private assets.
“The rising tide of equity markets should have a positive impact on the beta-sensitive component of Fiera’s revenues and offset the lost earnings contribution from recent PineStone outflows,” he said.
(Updates with comments from CIBC analyst and latest Fiera stock price. An earlier version corrected the year that PineStone was founded.)
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