A tough negotiator with big ambitions
Jean-Guy Desjardins has built a career on negotiations. He has created not one but two of Canada's biggest money management companies from scratch. He was the point man in the choice of Mark Carney for Governor of the Bank of Canada.
His four decades in finance can be broken down into a series of deals, each one consisting of days, weeks, months of gruelling back and forth talks. But at the end, he usually gets what he wants, whether it's convincing Canadian Imperial Bank of Commerce to pay the "crazy" price he asked for his first firm, TAL Global Asset Management, or prying Mr. Carney away from Stephen Harper's Conservative government, which had other plans for him.
Over three decades, starting in the 1970s, he built TAL Global Asset Management from just $35-million in assets into a power with $55-billion under management, before finally selling in 2001 to CIBC.
Then he started again, with Fiera Capital Corp., which in only nine years has soared up the rankings of independent asset managers, capped by a hard-won deal earlier this year with National Bank of Canada that put Fiera in the top five. Mr. Desjardins dreams of taking it to $150-billion, which would make it a big player on the North American scene.
TAL and Fiera may not be household names, but they run money for many of the pension plans and investment funds that people across the country count on for their retirement. His career has been out of sight to most Canadians, yet the deals he drives have an effect on many lives.
So when the waitress at Toronto Italian haunt La Bettola di Terroni informs him that he cannot have a Diet Coke, that there's only regular Coke, there's a moment where it appears the debonair Montrealer might try to convince her otherwise. Then he acquiesces. Next, he is warned he cannot have cheese on his spaghetti with lobster - no cheese with fish, house rules. There's another beat of tension. "You don't serve cheese?"
There's a Gallic sigh, and a graceful exit: "I don't want cheese. It doesn't go with fish."
Mr. Desjardins is tall and fit, dapper in a blue suit and Hermès tie, with his silver hair swept back from a tall forehead. In person, he looks younger than his 67 years, despite decades of the road-warrior lifestyle.
Maybe his reputation as a general who doesn't retreat is overblown, one begins to think. But the man does have a history of winning the deals, even when the person on the other side of the table is the prime minister.
Mr. Desjardins faced off with the federal government when he was lead director at the Bank of Canada, in charge of the search group responsible for finding a replacement for David Dodge, whose term was ending in early 2008. Mr. Carney was then a senior official in the finance department, and Mr. Desjardins wanted the Harvard- and Oxford-educated former Goldman Sachs banker.
"I had fantastic chemistry with the guy," Mr. Desjardins said. "He speaks my language because he's a capital markets guy, [and is] exceedingly intelligent, so well-educated."
It was a perfect fit, except for one thing.
"The Prime Minister had a different game plan for him," Mr. Desjardins says, choosing his words carefully, because the situation is obviously still sensitive even more than four years later. "The government's response was 'great choice,'" he recalls. "'We think very highly of him too.'"
Mr. Desjardins didn't back down. A few days later, the government gave the okay. Mr. Carney was in as Bank of Canada Governor.
Mr. Desjardins has obviously heard the talk that he is a tough negotiator. As the spaghetti arrives, along with a salad for me, he suggests he can't be all that hard on his partners, since in every case the deals have been win-win.
"I'm probably not very tough. If I was tougher it would be more win here and less there," he says.
Indeed, one executive who has faced off with him calls him "tough, but not unreasonable."
The sale of Mr. Desjardin's stake in TAL to CIBC a decade ago provides clues to how he got that reputation.
CIBC and TAL had partnered for years, but new management at CIBC didn't like partnerships. The bank wanted the shares owned by him and his partners - a stake that stood at 35 per cent.
He held out for two years as the sides dickered. Finally, pressed to name his price, Mr. Desjardins did. He recalls that it prompted then-head of CIBC John Hunkin to call him "crazy."
"It took another six months, but ultimately he [Mr. Hunkin] said 'Okay, okay, okay.'"
(The price was never disclosed.)
In 2003, Quebec's largest lender, credit union Desjardins Group, approached Mr. Desjardins to try to revamp the company's asset-management business. The emissary was Monique Leroux, who is now chief executive officer of the credit union behemoth. Would Mr. Desjardins run the unit?
"I said no, but I'd be interested in buying it." He ultimately bought about $5-billion of assets that became the seeds of Fiera, which through a series of acquisitions he had turned into almost $30-billion in assets under management by the end of 2011.
Then came the big coup. National Bank of Canada head Louis Vachon had come calling. Would Mr. Desjardins be interested in combining Fiera with his bank's Natcan unit? It would almost double Fiera's size instantly, so he was intrigued. But how would he convince National and Desjardins Group, rivals in many ways, to co-exist as minority investors in his firm?
After 14 more months of talks, with Desjardins Group on one side, National Bank on another, and Mr. Desjardins in the middle, the deal was done.
But he is not.
Mr. Desjardins wants to take on the U.S. with Fiera. He didn't with TAL, something he calls a "big strategic mistake." He doesn't plan to make the same mistake twice.
"The dream that Louis and Monique and I share is we have an opportunity with Fiera to build over the next 10 years an investment management organization with the scope to compete on a North American scale."
That means tripling Fiera's size. Right now it's big for Canada, but one of dozens of mid-sized players on the North American scene.
"To be a serious player you have to have $150-billion. At $55-billion, on a North American basis ..." Here comes that pause again. "Phhhfff. Do you know how many $55-billion firms there are?" He shakes his head and takes a bite of spaghetti.
He knows that time is limited to build a big independent. He expects the huge Canadian banks will soon be moving in to gobble up anything that's worth having in asset management. They've done it with investment banks. And mutual funds. They are going to do it in insurance, he figures.
"You tell me the investment management industry will be the exception to the rule?" He shakes his head.
Over coffee, the talk turns to Mr. Carney, and what's next for him. Since his appointment, he has been named head of the Financial Stability Board, an international banking regulator based in Switzerland. With governments around the world trying to find ways to avoid another crisis, it's one of the most critical jobs in global finance.
Mr. Carney has even been raised as a possible successor to Mervyn King, the current head of the Bank of England.
"Honestly, in my opinion, I don't think he'd be interested," Mr. Desjardins says.
Canadians don't realize what a plum job running the Bank of Canada is, he adds. The bank produces top-notch research, and the governor has total independence.
Running the Bank of England isn't exactly a step up, in his opinion, with more government meddling and work that isn't as stimulating.
"In Canada, I find it so sad, we should be so proud of an institution like that in a small country," Mr. Desjardins says.
"We have institutions that are first-class and we don't cheer them on."
Undergraduate degree from College Mont-Saint-Louis and a Masters of Business Administration from the University of Montreal's renowned HEC business school. He is also a chartered financial analyst.
One of his most important negotiations was with the woman who is now his second wife. They met after the sale of TAL. He wanted a second family. She wasn't sure. "I managed to turn her around," he says. "So we got married."
They have two daughters, six and five, in addition to three children from his first marriage, and nine grandchildren.
Where he began
His first job was as a stock analyst at Sun Life, in 1969, researching companies in the technology business. He already had a sneaking suspicion that he wasn't cut out for that particular job, preferring instead to think about macro issues. One day his boss came around and asked for volunteers to be measured on their ability to create value with their stock picks.
A statistical analysis of Mr. Desjardins' ability to pick stock showed it "turned out to be negative," he laughs. "I wasn't really surprised."
Instead he focused on a relatively new concept in finance, modern portfolio theory, which emerged in the 1950s. That became the basis for his career running money.
His first company
He partnered with the wealthy Timmins family, which made a fortune in mining, to run money. Over three decades he turned it into the hugely successful TAL Global Asset Management, now owned by Canadian Imperial Bank of Commerce.