BNS purchase targets key market

Article Excerpt

BANK OF NOVA SCOTIA $74 (Toronto symbol BNS; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.2 billion; Market cap: $88.8 billion; Price-to-sales ratio: 3.6; Dividend yield: 4.5%; TSINetwork Rating: Above Average; www.scotiabank.com) continues to expand its wealth management operations, which supply 12% of its total earnings. The bank recently completed its acquisition of MD Financial Management, which sells wealth management services to Canadian medical doctors and their families. MD Financial has $49 billion in assets under administration. To put that in context, the bank has $483.2 billion in assets under administration (as of July 31, 2018). Bank of Nova Scotia paid $2.6 billion in cash for MD Financial. To help cover that cost, it raised $1.7 billion by selling 22.7 million common shares at $76.15 a share. Expanding by acquisition adds risk. However, a 10-year agreement with the Canadian Medical Association gives the bank an opportunity to sell more of its services to MD Financial’s high-quality clientele. Bank of Nova Scotia is a buy…