Industrial-Alliance Life Insurance Co. said Friday that it is buying the mutual fund arm of The Co-operators Group Ltd.

Industrial-Alliance will acquire all the common shares of Co-operators Mutual Funds Ltd. that are held by an indirect wholly owned subsidiary of the Co-operators Group. This agreement will allow Industrial-Alliance to offer its own family of mutual funds under CMFL’s current structure. The deal is subject to regulatory approval.

Created in 2000, CMFL manages 11 mutual funds that are offered under three banners: the Co-operators Heritage Mutual Funds; the Co-operators/Crystal Mutual Funds; and the Co-operators/Credit Suisse Mutual Funds.

The funds are distributed by over 400 representatives operating out of about 50 mutual fund dealers. The market value of CMFL’s funds under management is almost $90 million.

Industrial-Alliance has been distributing the mutual funds of various external managers for several years, but, until now, it has never manufactured its own line of mutual funds. It does have its own line of segregated funds.

In 2002, Industrial-Alliance ranked third in Canada in terms of net segregated fund sales and fifth in terms of assets under management.

“This acquisition marks a major step forward in our growth strategy in the wealth management sector,” said Normand Pepin, executive vice-president at Industrial-Alliance.

“The purchase of CMFL. by Industrial-Alliance will ensure a smooth transition for our clients and representatives,” commented David Hartman, president of CMFL. “The Co-operators Group now intends to focus its wealth management strategy on its core strengths of pension management and segregated funds, but will continue to sell mutual funds, including those managed by CMFL. In addition, Co-operators Investment Counselling Ltd. will continue as investment manager for certain of the funds managed by CMFL.”