BNS deal taps key niche

Article Excerpt

BANK OF NOVA SCOTIA $74.36 (Toronto symbol BNS; Shares o/s: 1.2 billion; Market cap: $89.1 billion; TSINetwork Rating: Above Average; Dividend yield: 4.4%) is the third largest bank in Canada. It will now buy MD Financial Management, which sells wealth management services to Canadian medical doctors, their families and employees. That firm currently has over $49 billion in assets under management and about 110,000 clients. As well, MD Financial has a high retention rate: 80% of its clients have been customers for 10 years or more. Bank of Nova Scotia will pay $2.6 billion for the privately held business. To help cover that cost, it will sell 19.7 million common shares at $76.15 each to raise $1.5 billion. The bank expects to complete the purchase by October 31, 2018. The MD Financial acquisition pushes up the bank’s assets under management to $233 billion. But just as important, about 66% of that comes from high-net-worth clients. Those valuable customers currently make up just 14% of…