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Sun Life to Grow Wealth Management Business with Excel Funds


Sun Life Global Investments (Canada) Inc., a unit of Sun Life Financial Inc. SLF, has recently inked an agreement to be able to buy all outstanding shares of both Excel Funds Management Inc. and Excel Investment Counsel Inc. — collectively referred to as Excel Funds. The deal will help it align with Sun Life’s strategy of expanding its wealth management business in Canada.

Details of the Deal

The financial and other regulatory terms of the transaction remain undisclosed. Notably, the company anticipates completion of the same by the end of fourth-quarter 2017, pending approvals. On wrapping up the transaction, Excel Funds will join the family of Sun Life.

Benefits Behind the Deal

Sun Life Global Investments has displayed continued growth, since inception in 2010, with more than $18 billion in assets under management. The transaction will help Sun Life Global Investments execute its strategy to extend a range of new and advanced solutions to make it available to clients. Interestingly, the buyout will be a substantial value addition to Sun Life Global Investments’ portfolio, as Excel Funds and the acquirer share a compatible product line-up, utilizing a sub-advisor business model.

Sun Life Global Investments remains focused on growing its base through offerings in emerging markets, such as India, which will provide a significant growth opportunity for investors. Sun Life is aggressively trying to grow its Global Asset Management Business, and targets Sun Life Investment Management asset-under-management to be to the tune of $100 billion over the next few years.

Coming back to Excel Funds, it is a highly regarded investment manager, which specializes in emerging markets funds with about $700 million in assets under management. The newly secured agreement will thus aid Sun Life Global Investments to boost growth with the help of new and dynamic market offerings. In addition, the transaction will add Excel Funds’ exchange-traded funds to Sun Life Global Investments’ abilities. Also, the deal will support Sun Life in not only expanding its wealth management business in Canada but also providing clients with advanced investment solutions.

On the other hand, this buyout will enhance Excel Funds’ operations as it will now be part of a much larger global fund family.

Zacks Rank and Share Price Movement

Currently, Sun Life holds a Zacks Rank #2 (Buy). Shares of Sun Life have rallied 21.5% in a year’s time, underperforming the industry’s increase of 24.6%. However, we expect sustained operational performance, prudent acquisitions and a robust capital position to turn the stock around in the near term.

Acquisitions Ramping Up Growth Profile

Acquisitions are a well-accepted growth strategy among insurers. To that end, Arthur J. Gallagher & Co. AJG recently purchased Nebraska-based Lincoln Financial Management, LLC. Also, in this month, Aon plc AON signed a definitive agreement to acquire The Townsend Group, majority stake of which is owned by Colony NorthStar, Inc., a leading global real estate and investment management firm.

Other Stock to Consider

Investors interested in another bullish-ranked stock from the insurance industry can consider First American Corporation FAF.

First American Corporation provides financial services. The company delivered positive surprises in all the last four quarters with an average beat of 12.64%. The company holds a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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