Clearwater taps into new sales channel via Fiera Capital

Clearwater Capital Partners (Clearwater) has agreed to merge with Toronto-listed asset management firm, Fiera Capital.

Clearwater has been in the process of raising capital for its latest strategy, targeting $600 million, and its ‘generation fifth product’ remains open for new capital as it had garnered $400 million across various vehicles as of December 31, according to Robert Petty, a managing partners and co-founder of Clearwater Capital Partners.

Asked for investors’ views about the acquisition, Petty said: “Our LPs fully recognise that today it is important to be able to have investment platforms where [we are] putting out our capital, have enough for the team to grow, [and] the team to have a full wheel with not only capital but also longevity.”

“Our direct lending platform focusing on China, our direct lending strategies in India, as well as our core fund V, are closed-ended capital and taking in more capital,” Petty told PDI on Friday.

Clearwater is an investment firm that targets private equity, distressed debt and credit investments with a focus on platform-driven direct lending to companies in Asia.

The private credit manager also launched a $150 million co-investment vehicle with the World Bank’s International Finance Corporation (IFC) committing $75 million, according to a summary of investment information disclosed by IFC on January 17.

“Asian credit is an under-allocated asset class. It is a $50 trillion sized market, and [the region] has the world’s fastest-growing economies,” Petty told PDI, adding that the financial infrastructure in India and China have been evolving over the years.

After the expected completion of the merger in the next three months, Clearwater will continue to oversee its current portfolios, not selling any existing ones and growing its assets under management, according to Petty.

“We are bringing more products to the market with Fiera [Capital] over time,” he said, adding that, “this is a way for us to exponentially grow our sales and distribution.”

Fiera Capital, the acquirer of Clearwater Capital, agreed a share purchase sized at $21 million as of March 1, subject to various adjustments, Daniel Richard, a senior vice president of corporate communications and investor relations at Fiera Capital, told PDI on Friday.

Fiera Capital will pay $12 million to Clearwater in cash and will issue $9 million in Fiera Capital Class A subordinate voting shares, according to Richard.

The agreement comes as both firms plan to grow their sales and distribution capacity across the region.

“The acquisition will add a new alternative investment strategy to our existing private alternatives division in addition to adding geographic presence in the Asia-Pacific region,” Richard said, adding that, “this will add 38 dedicated asset management professionals, five offices and $1.4 billion in assets under management to Fiera Capital’s portfolio.”

Fiera Capital has $530 million in corporate lending business with a typical loan issuance sized from $1 million to $20 million with terms between three and 24 months, according to its public disclosure as of March 5.

The firm has exposure to construction financing projects issuing mainly mezzanine loans of between $1 million and $30 million apiece. Fiera Capital had C$128 billion in assets under management as of December 31.