Bank of Nova Scotia (Scotiabank) and Sun Life Financial’s asset-management division, SLC Management, have entered into a partnership aimed at capitalizing on the growing demand from wealthy Canadians for private credit investments. As part of this strategic agreement, Scotiabank’s high-net-worth clients will gain access to a range of alternative investments in private real estate, credit, and infrastructure through SLC Management.
Additionally, Sun Life will commit C$100 million (approximately $73.63 million) as seed capital to support future investment opportunities arising from this collaboration. The move comes as private credit emerges as one of the fastest-growing and most attractive private asset classes globally, with projections estimating its assets to reach $2.3 trillion by 2027, according to data from Preqin.
In recent years, affluent Canadian investors have increasingly sought alternative investments to diversify their portfolios and seek new sources of yield and returns. Private alternative investments have become more accessible and attractive, playing a crucial role in enhancing portfolio diversification and risk-adjusted returns.
The partnership between Scotiabank and SLC Management aligns with the trend seen in the financial industry, with more private capital providers and traditional banks offering credit solutions to both corporate and consumer clients. This shift has gained momentum since the global financial crisis, driven by heightened regulatory requirements and rising costs affecting banks’ lending and traditional service businesses.
While the private credit market in Canada is not as mature as in the United States and Europe, it is gradually gaining attention. A recent survey conducted by Canadian firm Ninepoint Partners revealed that nearly two-thirds of financial advisors anticipate increasing their clients’ exposure to private credit in the coming year.
This strategic collaboration underscores the efforts of Canadian banks, including Scotiabank, to explore new avenues of growth and double down on the wealth management sector. Amid an uncertain economic environment, some segments of the banking industry face challenges, prompting a pivot toward wealth management, where substantial opportunities for expansion exist.
Scotiabank’s Global Wealth Management division ranks as the third-largest business of its kind in Canada, managing approximately C$631 billion in assets globally. On the other hand, SLC Management boasts an impressive track record, overseeing $361 billion in assets. As affluent Canadians continue to seek alternative investment opportunities, this partnership positions both institutions to serve their clients’ evolving financial needs effectively.
In conclusion, Scotiabank’s collaboration with SLC Management reflects the evolving landscape of the financial industry, with a growing focus on private credit investments. As Canadians increasingly explore alternative avenues for enhancing their investment portfolios, this partnership aims to offer them a wider range of options while capitalizing on the burgeoning private credit market’s potential for growth.