Pavilion acquires institutional advisory firm

Stratford, Pavilion’s first acquisition in the U.S., will complement Brockhouse & Cooper Inc., which Pavilion acquired in the spring of 2010. Brockhouse & Cooper services institutional clients in Canada, the U.S., Japan and Britain, says Marty Weinberg, Pavilion’s president and CEO.

“At Pavilion, we want to be a financial services firm that caters to institutional and high net-worth markets in select geographies,” he says. “Brockhouse & Cooper caters to large pension plans with assets of more than $1 billion. Stratford is unique, in that it’s a complement of about 25 people. They’re all young, highly educated and they have clients that have been with the firm for 10 years.”

By combining Stratford with Brockhouse & Cooper, he adds, Pavilion will be able to leverage the resources of both acquired firms, not only in their research capabilities but also in the methodology by which they deliver services to clients.

In fact, there are “great” synergies, from a research perspective, with the two firms, Weinberg says, which should result in additional products and services being offered to all of Pavilion’s clients.

Brockhouse & Cooper has a global macro strategy team that focuses primarily on global portfolio managers and has a proprietary database of more than 5,000 mandates.

Stratford, on the other hand, is geared toward U.S.-mandated portfolio managers and, to a lesser extent, on their global counterparts because the firm caters primarily to U.S. institutions.

Stratford consults on a retainer basis to clients that have assets totalling US$30 billion, Weinberg says, while Brockhouse & Cooper consults to clients that have several hundred billion dollars in assets.

In an effort to reduce confusion with the various names and divisions at Pavilion, both Stratford and Brockhouse & Cooper will change their names to Pavilion in the second half of 2012. “Our longer-term objective,” Weinberg says, “is to have everyone under one company, one brand strategy.”

Along those same lines, on Pavilion’s high net-worth side, the firm has renamed its Harrow Partners division Pavilion Investment House. Weinberg says the division is in “expansion mode” as it caters to high net-worth and ultra-high net-worth clients.

“We continue to grow organically,” says Weinberg, “and we’ve had very good success in that area, although it’s not as sizeable as we would like. We’re in discussions with a number of parties, both individuals and corporations to join us, not only in Canada but abroad.”

Acquisitions, of course, require capital, but, Weinberg says there are no plans to take Pavilion, public, as he did with Assante Corp., which he launched successfully in the 1990s. Weinberg’s team continues to examine acquisition possibilities in other countries and continents, but its primary focus is North America.

“In all likelihood,” Weinberg adds, “we will be looking for money beyond our internal group as we continue to expand.”

Does any of this sound familiar? There are some striking similarities between the corporate strategies of Pavilion and Assante. Before selling the latter to Toronto-based CI Financial Corp. in 2003 for $846 million, Assante had made its mark with an aggressive acquisition strategy involving both manufacturers and distributors of financial services products on both sides of the Canada/U.S. border.

“We feel Assante was quite successful. We’d be fortunate to pull off another Assante,” Weinberg says. “We’re working hard to build out this model. We’ve had tremendous success to date. All of our [divisions] hit record numbers in 2011.”

But while Assante acquired firms at a furious pace, particularly in the mid- to late 1990s, Pavilion won’t operate at the same speed, says Weinberg: “The institutional business is a little different. The sales cycle is a very long time.

“On the high net-worth side, it’s more difficult to find good-fitting partners after so much consolidation has taken place. The right fit, rather than size, is key to our strategy.”

Another similarity with Assante is that Weinberg will run the show from his hometown of Winnipeg. Perhaps the only difference is that Assante had upscale offices in a downtown tower, whereas Pavilion operates out of a five-storey building in the Crescentwood neighbourhood, just a couple of kilometres from Weinberg’s residence.

“We’ve chosen to continue to be here, and we’re happy to keep working in this community,” Weinberg says. “We find talented people here, and our Winnipeg office is bursting at the seams.”

Pavilion has about 125 employees, about 40 of whom are in Winnipeg, more than 60 are in Montreal, 20 are in Chicago and a handful are in each of Edmonton and Toronto.

Pavilion has about 60 shareholder employees, who own about 90% of the company. IE