The Bank of Nova Scotia made a big play to expand its customer base on Thursday with a deal to acquire Ottawa-based financial adviser MD Financial Management for $2.5 billion.
The company provides financial planning, insurance, banking, investment and estate and trust services to 45,000 Canadian doctors and 65,000 of their family members with more than $49 billion in assets under management and administration.
The acquisition will give Scotiabank the largest private investment counsel business in Canada, said bank CEO Brian Porter, on a conference call Thursday.
"We strongly believe there is room to grow as penetration of the physician community is currently only about 35 per cent," he said.
"We believe that there are significant opportunities to deepen MD client relationships through Scotiabank's retail, private business and small business products and services."
Porter said the acquisition is part of a $7-billion spending spree the bank has been on in recent months.
The bank purchased a 68 per cent stake in Chilean banking operation BBVA Chile for $2.9 billion and Citibank's consumer and small and medium enterprise operations in January for an undisclosed amount.
It also bought Canadian investment manager Jarislowsky Fraser for $950 million in February, and a controlling interest in Peru's Banco Cencosud for about $130 million in May.
Scotiabank's MD acquisition will be partially funded by a $1.5-billion public offering of 19.7 million common shares at $76.15 per share that's expected to close on or after June 8.
The acquisition will also include a $115-million investment from the bank over the next 10 years to support the advancement of the medical profession and health care in Canada, and a 10-year collaboration that will see the Canadian Medical Association exclusively promote MD's services as the preferred provider of financial products to physicians.
The bank said MD will operate as a stand-alone brand within its wealth management branch.
The deal is subject to regulatory approvals, but is expected to close in fall.