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Sun Life to acquire Prime Advisors, adding $13 billion in assets

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(Bloomberg) — Sun Life Financial Inc. agreed to buy asset manager Prime Advisors as Canada’s third-largest life insurer seeks to boost fee income.

The cash deal for Redmond, Washington-based Prime Advisors is set to be completed in July, SunLife said in a statement Tuesday that didn’t disclose terms. The purchase would add $13 billion in assets to the Toronto-based firm’s investment-management unit, bringing the total it oversees for third parties to C$50 billion ($40 billion).

Managing money for pension funds and smaller insurers “is not a heavy capital user unlike the insurance businesses and it’s a business that’s growing,” Sun Life Chief Investment Officer Stephen Peacher said by phone. “The ability to go outside the public markets to find alternative strategies to access yield — whether it’s real estate, commercial mortgages or private fixed income — that’s another area that institutions are trending to.”

Sun Life announced a deal to acquire real estate investor Bentall Kennedy Group this month and bought Ryan Labs earlier this year, adding $5.1 billion in assets. The insurer’s shares have declined 0.8 percent so far this year in Toronto to C$41.60 at market close Monday.

Donald McDonald, the head of Prime Advisors, said the firm won’t be cutting jobs and will remain based in Redmond. Founded in 1988, the company will operate as a standalone firm under Sun Lifeand will seek to offer new products including direct investment in commercial real estate, McDonald said.