DBRS Assigns BBB Issuer Rating to DundeeWealth Inc., Confirms Preferred Share Rating at Pfd-3

DBRS has today assigned an Issuer Rating of BBB to Dundee Wealth Inc. (DW or the Company) and has confirmed the corresponding Preferred Share, Series 1 rating of Pfd-3. The ratings have a Stable trend.

The ratings reflect the growing success and profitability of the Company’s investment management business, which has enjoyed increased assets under management (AUM) in recent years based largely on strong net sales of investment products, investment-fund performance and the timely introduction of innovative wealth-management products. Following several acquisitions of financial advisory firms, the Company has also developed the largest network of independent financial advisors in Canada with over 1,800 representatives operating out of 650 offices using an open-architecture product platform.

The financial services segment, which includes the advisor network, corporate finance and capital markets, and banking has not performed as well in recent years due to non-recurring expenses related to the integration of information platforms, which are now both compliant with the Investment Dealers Association (IDA) and the Mutual Fund Dealers Association (MFDA). Developmental spending and the hiring of new senior management in the financial services businesses in the past two years reflect the Company’s aggressive efforts to build scale and profitability in financial services in order to expand these operations and better support growth in AUM.

The Company’s financial position is inherently strong as it is able to internally fund its sales commission expense associated with organic growth. The recent decision of the Caisse de dépôt et placements du Québec (CDPQ) to put its 16.3% shareholding in DWM Inc. back to the Company in exchange for DW shares and cash (total consideration $331 million), increased financial leverage (debt plus preferred shares) to 20.6% of total capitalization from 8% at year-end 2006. DBRS regards financial leverage in this range as being consistent with the Pfd-3 preferred share rating for an investment management company of this size

Note:
All figures are in Canadian dollars unless otherwise noted.