Sun Life Financial Inc. is looking for deals where others may fear to tread.
The Canadian life insurer is seeking bank partnerships in Hong Kong, investments in riskier private credit and tuck-in real estate purchases — all areas facing heightened uncertainty.
Despite geopolitical tensions, market volatility and the impacts of the coronavirus pandemic, Sun Life’s top executives are still on the hunt for acquisitions.
“We came into COVID-19 with a pipeline of conversations underway, and those conversations continue,” Chief Executive Officer Dean Connor said in a video interview. “We’re continuing to be actively out there talking to people about what’s possible.”
Acquisitions have been a common refrain for Sun Life executives in recent years, and the Toronto-based company has about C$5.8 billion ($4.3 billion) available for deals. While Connor is bullish on more tie-ups across the firm’s key pillars of Canada, the U.S., Asia and global asset management, he sees the pandemic stifling activity in the near term.
“Not a lot of transactions take place because sellers are trying to figure out where they stand and are trying to consolidate their positions and they don’t want to sell at depressed values, and buyers are trying to figure out where they stand,” Connor said in the interview Monday. “We don’t think you’ll see a lot of transactions in the next six months.”
Sun Life is interested in deals in the seven Asian markets where it operates, including increasing stakes in joint ventures and striking partnerships with banks to distribute its insurance products, known as bancassurance.
The firm would like to strike a bancassurance deal in Hong Kong along with other opportunities, even amid growing tensions with China that have some observers questioning the city’s future as an Asian financial hub.
“We’re not seeing Hong Kong as being an area that’s going to have problems in terms of a Canadian company that’s been there for a long time, that understands the market and understands the people and already has a business in China,” Chief Financial Officer Kevin Strain said in the interview. “So I think it’s finding your way through all the noise, but there’s lots of business opportunities.”
Sun Life sees Hong Kong as offering long-term growth opportunities and a springboard for additional business with mainland China in the Pearl River Delta — which includes China’s tech center of Shenzhen and the manufacturing hub of Guangzhou — through greater business access and an opening up of immigration across the economic region, said Strain, who previously spent five years overseeing the Asia business out of Hong Kong, where Sun Life has operated for 128 years.
U.S. Expansion
Closer to home, Connor’s interests include expanding in group benefits in the U.S. — where, he said, “we’ve got enough scale to invest and compete” — and building up its Canadian retail wealth management, though he said there isn’t much to buy at the moment in an industry dominated by Canada’s large banks.
Connor also reiterated interest in rounding out Sun Life’s alternative asset manager, SLC Management, with a deal in below-investment-grade private credit that he suggested would be an “interesting add-on” for its institutional-investor clients.
“If you look at pension funds and institutional investors, generally speaking, the last decade has been one of moving up the risk curve in an ever-lower-return world,” Connor said. “We think there will be demand there, just because of the economics, and we think COVID is actually going to accelerate that demand.”
SLC Management deepened its real estate exposure with last year’s combination of Bentall Kennedy and GreenOak, creating a global real estate investment management adviser and services provider with US$48 billion of assets under management. Connor sees opportunities for smaller deals to add to BentallGreenOak, which has a presence in 24 cities across a dozen countries.
‘Rock Star’
“It’s got scale and so there might be some things we want to tuck in and add to maybe extra geographical diversification there, but we really have all the pieces to compete effectively in that market,” he said. Sun Life has “great exposure” in industrial real estate, which Connor described as the “rock star of the real estate world right now,” and its apartment holdings are “performing very strongly.”
Coronavirus quarantines worldwide are raising questions about post-pandemic demand for office space, with some companies finding that its employees are performing well from home.
“There will be some ebb and flows, but long term we think it’ll be a great asset category for long-term investors,” Strain said. “There will be demand for work in the office. The productivity, in being in the same place and working as a team, I don’t think that’s going to permanently go away.”
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
