Fiera Capital Corp. FSZ-T -4.10%decrease is locked in a legal battle with its recently terminated infrastructure head, with both sides suing each other after years of poor fund performance and investor redemption requests.
Alina Osorio, Fiera Infrastructure’s former president, is suing the company for wrongful dismissal, partly attributing her departure to differences over how to handle a large queue of investor redemption requests that now totals $700-million. Ms. Osorio, who sold her infrastructure business to Fiera a decade ago, also argues in her suit thatshe has the right to buy it back.
Two weeks after she filed her lawsuit in September, Fiera filed its own, alleging Ms. Osorio secretly tried to engineer a sale of Fiera’s majority stake in itsinfrastructure business and that she persistently refused to provide Fiera with investment information for the fund.
None of the allegations has been provedin court and neither partyhas filed aformal response yet. Thelawsuits extend the long-running drama at Fiera, which lost its largest shareholder – Desjardins Financial Holdings Inc. – last year and whose share price has been volatile since the company reversed its succession plan and founder Jean-Guy Desjardins took back control in January, 2023. (A new CEO has since taken the helm.)
The company’s shares are down 32 per cent since Mr. Desjardins returned, while the S&P/TSX Composite Index
N/A is up roughly 45 per cent over the same period.
Fiera Infrastructure’s performance has also struggled. The fund aims to deliver stable returns by investing in private infrastructure assets and companies such as PureSky Energy, a solar and battery power storage platform in the U.S., and IslaLink, which owns fibre telecommunications infrastructure connecting the Balearic Islands to mainland Spain. However, the fund’s average annual return since the start of 2022 is only 1.2 per cent.
Fiera Capital announces new CEO as company overhauls executive leadership
In its lawsuit, Fiera alleges that certain investments spearheaded by Ms. Osorio “performed poorly” and that fund performance “under Ms. Osorio’s leadership was below its target range.”
Ms. Osorio joined Fiera in 2016 after the Montreal-based asset manager acquired an infrastructure fund she started, then turned it into Fiera Infrastructure, where she was president and co-owner. Today, the business is a division of Fiera’s private markets arm that invests in assets such as real estate, private equity and infrastructure.
In September, Fiera announced a leadership change for the business, naming Bruno Guilmette as its new global head of infrastructure.
At the time, Fiera said Ms. Osorio would step down as president but remain on Fiera Infrastructure’s board of directors and its investment committee. However, she filed a lawsuit in Ontario Superior Court the same day, alleging she was wrongfully terminated partly because she disagreed with how Fiera wanted to manage its large redemption queue.
Fiera Infrastructure manages $4.7-billion in assets, and its redemption queue had grown to $700-million because the fund can’t sell assets or bring new investors in fast enough to meet the requests.
Ms. Osorio alleges she proposed a “balanced approach”that included asset sales; allowing investors to exit by selling at a discount; and accelerating marketing of the fund to find new investors. But she alleges Fiera was insistent on selling assets, even if it had to be done at fire sale prices.
Fiera alleges in its suit that Ms. Osorio did not develop “a responsible plan to address the redemption queue” and instead proposed a sale of Fiera’s stake in the infrastructure business, adding that she was against bringing in new leadership.
Redemption queues are a hot topic in Canada because a growing number of investors are finding themselves trapped in private asset funds, with limited opportunity to exit them. Private asset funds are increasingly being sold to retail investors, some of whom do not understand the rules that allow fund managers to freeze or limit redemptionsin bad markets.
In Fiera Infrastructure’s case, the investors are largely institutions, charitable endowment funds and high-net-worth individuals, but even this sophisticated investor base has grown frustrated by the redemption queue.
In March, Richard Hylands, president of Montreal-based Kevric Real Estate Corp., a company that has developed major projects such as Place Bonaventure in Montreal and 150 Bloor Street in Toronto’s Yorkville neighbourhood, sued Fiera and Mr. Desjardins after investing $50-million in Fiera funds, including the infrastructure fund, only to find some of it trapped by the redemption freeze.
Mr. Hylands declined to comment for this story.
In an e-mailed statement to The Globe and Mail, Fiera said that “while a redemption queue exists, it is being processed in the ordinary course under the governing documents with investment committee oversight and without forced or distressed sales. The strategy has been presented fairly to clients, and in accordance with our obligations.”
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