TORONTO – Jovian Capital Corp. (TSX:JOV) is selling its Horizon Beta Pro family of Canadian exchange-traded funds to South Korea’s largest mutual fund company, which is building its presence in the global ETF industry, the companies said Friday.
Besides BetaPro Management Inc., the manager of the Horizons BetaPro family of exchange traded funds, the deal includes AlphaPro Management Inc., which manages the AlphaPro family of ETFs, as well as other related business assets.
Toronto-based Jovian, which owns 58 per cent of the ETF business that will be purchased by Mirae Asset Global Investments Co. Ltd., said the final price will be determined closer to the deal’s closing, expected to be in November.
Jovian’s portion of the purchase price is anticipated to be $90 million, based on an enterprise value of $150 million for the entire ETF business included in the transaction.
The company’s stock hit an intraday high of $11.99 on the Toronto Stock Exchange, beating the previous 52-week high of $11.50, but dropped later in the session. Jovian’s shares were at $11.05, down 45 cents, in early afternoon.
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“We are very pleased to be partnering with Mirae to continue to grow our business and expand into other international markets,” said Adam Felesky, CEO of BetaPro and AlphaPro.
“Mirae is South Korea’s largest mutual fund manager and has tremendous global reach. With their support, we look to continue developing innovative new ETF products to meet growing demand from investors in Canada and internationally, Felesky said.
Exchange traded funds, which usually attempt to match the performance of an index of stocks, bonds or other assets, have become an increasing popular form of investment because they offer broad diversification and relatively low fees.
ETF units are listed on stock exchanges and can be bought or sold like a stock, with the price determined by market conditions throughout the trading day.
By contrast, the value of mutual fund units is usually calculated at the end of a trading day – making them less responsive to intraday market fluctuations. Many mutual funds may also attempt to outperform their benchmark index.
The BetoPro funds follow the passive investment approach while the less-prominent AlphaPro funds take an active investment approach.
“Mirae Asset respects the management skills of BetaPro and sees them as an integral part of the future of Mirae Asset,” Hyeon-Joo Park, chairman and founder of Mirae Asset, said in a statement.
“Mirae Asset is traditionally very strong in actively managed products and through this transaction we expect to offer our clients a more diversified product line-up with a varied and high quality suite of ETF products,” Park said.
Mirae Asset’s Tiger ETF series are listed on the Korea Exchange and Hong Kong Exchange. They had US$1 billion of assets as of June 30, according to BetaPro.
By comparison, BetaPro and its subsidiary AlphPro, which have the largest ETF family in Canada listed on the Toronto Stock Exchange, have about $3 billion in assets under management.
“Mirae brings a wealth of both institutional and emerging markets expertise that should enhance BetaPro’s ability to serve our ETF investors,” said Howard Atkinson, BetaPro’s president.
Jovian’s interest in Hahn Investment Stewards & Company Inc., a global wealth manager of ETF portfolios for private and institutional investors, is not part of the transaction.
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