Bank of Nova Scotia (Scotiabank) and Sun Life Financial’s asset-management division are teaming up to meet the growing demand among affluent Canadians for private credit investment options.
Under this partnership, Scotiabank’s high-net-worth clients will gain access to alternative investment opportunities in private real estate, credit, and infrastructure through Sun Life’s asset-management division, SLC Management.
Sun Life will additionally provide C$100 million (approximately $73.63 million) as initial funding for future investment opportunities.
This development aligns with the rapid growth and appeal of private credit as an asset class. According to data from Preqin, private credit is expected to expand to $2.3 trillion in assets worldwide by 2027.
Simultaneously, prosperous Canadian investors are showing growing interest in alternative investments as they seek additional avenues for generating yield and returns on their investments.
“Private alternative investments are in great demand right now; in the past, institutional investors with sophisticated financial expertise were the main beneficiaries of these investments. They play a crucial role in diversifying portfolios and achieving returns adjusted for risk,” noted Glen Gowland, Head of Global Wealth Management at Scotiabank.
In the wake of the global financial crisis, a growing number of private capital providers and traditional banks are venturing into the realm of offering credit to both companies and individuals. This shift comes as banks face increased regulation and rising costs that affect their lending and financial services operations.
“Private credit is becoming more popular in Canada even though it is not as well-established as it is in the US and Europe. A recent survey by Ninepoint Partners, a Canadian firm, found that nearly two-thirds of financial advisors plan to increase exposure to private credit in client portfolios in the coming year.
In response to changing dynamics, some Canadian banks are focusing on wealth management as they seek new avenues for growth in an uncertain environment.
Scotiabank’s Global Wealth Management is Canada’s third-largest business in this field, managing a total of C$631 billion in assets worldwide. Meanwhile, SLC Management oversees $361 billion in assets.”
