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AGF Announces Changes to Its Relationship with Instar Group Inc.

May 26, 2021 • Announcements

Strategically Pivoting to Diversify its Alternatives Business

AGF Management Limited (AGF) today announced that it has entered into a definitive agreement with Instar Group Inc. (Instar) to conclude their joint venture relationship in InstarAGF Asset Management Inc. (InstarAGF) following the establishment of its two flagship funds, InstarAGF Essential Infrastructure Fund I and II (together, the InstarAGF Funds). AGF will retain its economic interest in the InstarAGF Funds including an upcoming third fund (Fund III) managed by Instar, which AGF has agreed to support with an anticipated US$50 million capital commitment.

“We are strategically pivoting our focus to further diversify our relationships and capital. Growing our private alternatives business remains integral to our strategy including bringing to market unique alternative offerings for our clients,” said Kevin McCreadie, Chief Executive Officer and Chief Investment Officer, AGF.

AGF has $2.6 billion of AUM and fee earning assets in its private alternatives business today. AGF’s strategic vision for private alternatives combines diversified capabilities across multiple planks alongside participation as a core investor in bespoke and distinct opportunities that deliver added value for the firm’s shareholders.

“We are excited about the path forward for AGF, including deepening our platform with our upcoming private credit fund launches and our ongoing work with AGF’s Alternatives Advisory Committee,” added McCreadie. “The conclusion of the InstarAGF joint venture is a natural progression of the relationship between our two firms and delivers each of us with the flexibility to accelerate our respective business goals.”

Based on the terms of the agreements, AGF will maintain its respective investment and carried interest participation in the InstarAGF Funds, invest in and receive a carried interest entitlement in Fund III and receive ongoing fees based on assets under management.

AGF has entered into an arrangement with Instar whereby AGF will earn ongoing annual fees of 14 bps on the assets under management of the InstarAGF Funds and, upon AGF’s commitment to the Fund III, AGF will earn ongoing annual fees of 7 bps on the assets under management of Fund III. Revenue earned from the fee arrangement and carried interest entities will directly flow to AGF’s EBITDA as there are no incremental expenses.

AGF’s monthly AUM disclosure going forward will be modified to include a line “other fee earning assets” related to AUM associated with this agreement. Disclosure related to income from this fee arrangement will be included in the financial statement notes of AGF’s quarterly financial statements. AGF’s continued interest in the carried interest and the fee arrangement will be recognized as financial instruments under IFRS9. As a result, the current estimated fair value, of AGF’s share of the carried interest and the fee arrangement will be initially recorded on the Balance Sheet and will be carried at its estimated fair value thereafter. Revenue related to the licensing arrangement and carried interest will be recognized in the Statement of Income as amounts become realized.

AGF’s Alternatives Advisory Committee

AGF’s Alternative Advisory Committee, chaired by Blake Goldring, Executive Chairman, AGF, which launched in September 2020 provides strategic insight and advice to the Executive Management Team of AGF. Ron Mock, former President and CEO at the Ontario Teachers’ Pension Plan, and Michael Latimer, former President and CEO of OMERS, are current members of the Committee.

About AGF Management Limited

Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.

AGF has investment operations and client servicing teams on the ground in North America, Europe and Asia. With over $40 billion in total assets under management, AGF serves more than 700,000 investors. AGF trades on the Toronto Stock Exchange under the symbol AGF.B.

Media Contact

Amanda Marchment
Director, Corporate Communications
416-865-4160
amanda.marchment@agf.com

MEDIA

Media Contact

Amanda Marchment
Director, Corporate Communications
Phone: 416-865-4160
Email: amanda.marchment@agf.com

Karrie Van Belle
Chief Marketing & Innovation Officer
Phone: 416-865-4320

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