MICHAEL LEE-CHIN



 

Michael Lee-Chin's 'bittersweet' day
He is the man who built AIC Ltd. into a mutual fund powerhouse in the 1990s, Michael Lee-Chin preached the “buy, hold and prosper” mantra. Now, he's selling after years of holding without prospering.

For Mr. Lee-Chin, who modelled himself after Warren Buffett, running mutual funds was a storybook rags-to-riches career. But stock markets that made the AIC owner a billionaire took away a sizable chunk of his fortune in recent years. Yesterday, the 58-year-old sold his Canadian mutual funds to Manulife Financial Corp for an undisclosed amount.

“It is a bittersweet day,” said Mr. Lee-Chin, who bought the AIC Advantage Fund in 1987 with less than $1-million in assets. “It's been my baby for nearly 23 years. It's my passion and my legacy.”

When AIC's value-oriented style was clicking in the 1990s, funds outperformed and assets hit $15-billion. In 1999, Mr. Lee-Chin considered selling a stake in an IPO that, sources say, valued the firm at $1.8-billion, only to remain private.

There was a company helicopter sitting outside the Burlington, Ont., head office.

AIC's success also helped Mr. Lee-Chin purchase control of a bank in Jamaica. He cut huge charity cheques, donating $30-million to the Royal Ontario Museum and $5-million to alma mater McMaster University.

However, AIC's stubborn commitment to owning just a handful of stocks, including financial services companies, meant many of its funds underperformed in recent years. Investors redeemed with frightening regularity, month after month. As the market meltdown clobbered AIC's positions in banks and money managers, Mr. Lee-Chin began quietly shopping AIC more than a year ago.

Manulife is buying a company with just $3.8-billion of assets. While AIC and the insurer did not release a price, sources estimate Mr. Lee-Chin will receive less than $150-million. True to his faith in financial services, Mr. Lee Chin is taking full payment in Manulife stock.

“The transition [to Manulife] is the bitter part,” he said. But moving to future plans for his privately owned Portland Holdings company, he said: “The sweet part is that we are really the quintessential investment firm in Canada. [Portland] is a foundation from which we can grow our global asset management business.”

In other words, Mr. Lee-Chin sees the sale of AIC as the beginning of a new career, not as an inglorious ending. Friends take a similar view.

“I don't believe Michael has been defeated. He continues to conduct himself with great dignity,” said William Thorsell, chief executive officer at the Royal Ontario Museum. He said Mr. Lee-Chin's priorities have shifted to building the Jamaican bank, and that in a recent speech to ROM donors, the AIC founder “spoke passionately of the need to remain calm in difficult times, and stay true to your business principals and your roots.”

Through Portland, Mr. Lee-Chin will continue to run a number of AIC funds as a sub-adviser to Manulife. He plans to use Portland to expand a Caribbean empire that includes control of National Commercial Bank Jamaica Ltd. and real estate.

In recent months, he faced pressure to put more cash into some of these Caribbean companies.

Within the industry, there's a sense that Mr. Lee-Chin made the best of a bad situation by selling AIC.

While the fund industry is already highly consolidated – with the top 10 players controlling 80 per cent of the assets under management – Brad Hardie, head of Bank of Montreal's financial institutions team, said: “We will see more deals like the AIC deal.”

“The business is all about distribution and scale. Players who fall short in those areas are vulnerable to being taken out,” he said.

From rags to riches

It is the stuff of fairy tales. Born into poverty in Jamaica, Michael Lee-Chin got to Ontario's McMaster University on scholarship, earned his engineering degree and then took a job flogging mutual funds. While successful, he realized that the real money was to be made running funds, not selling them. He took over a $1-million fund in 1987 and spun it into a $15-billion money manager in just over a decade.

AIC Ltd. made Mr. Lee-Chin a billionaire, and he had all the toys, including the same type of $60-million Global Express corporate jet used by Bill Gates, and two caged parrots in the AIC lobby, named Calypso and Fantasia (trained to squawk "buy" and "hold").

The fairy tale ended yesterday. With assets down and investors walking as AIC underperformed, Mr. Lee-Chin sold the fund manager to Manulife. -  13 August 2009   GLOBE & MAIL

Billionaire businessman Michael Lee-Chin has given $30-million to the expansion of the Royal Ontario Museum -- a gift that equals donations from the provincial and federal governments.

The ROM will in turn name its new "Crystal" expansion after Mr. Lee-Chin, the chairman and CEO of AIC Limited. In addition, a four-storey atrium inside the Crystal will be called the Hyacinth Gloria Chen Crystal Court, in honour of Mr. Lee-Chin's mother.

Mr. Lee-Chin said he decided to make the donation after learning much of the museum's collection is not on display due to a lack of exhibition space.

"I was taken aback by the number of important items that were in storage and not showcased," he said.

The museum, he said, serves an important civic purpose.

"The ROM does a good job of bridging cultures through understanding and education at the highest level," said Mr. Lee-Chin.

As of yesterday, the ROM had raised $114-million toward the $200-million expansion.

The Crystal, designed by architect Daniel Libeskind, will add six new galleries housing dinosaur, mammal and textiles exhibits, among others. Ground will be broken on May 28.

"We are here to recognize a special donor, whose lead gift will go down as one of the most significant philanthropic acts in Canadian cultural life," said Hilary Weston, chairwoman of the ROM's fundraising campaign.

"He is a self-made man, an entrepreneur, whose inspiring example has come to represent the opportunities that Canada provides [people] with the drive, spirit and imagination to pursue their dreams."

Born the first of nine children in Port Antonio, Jamaica, Mr. Lee-Chin emigrated to Canada in 1970 to study civil engineering at McMaster University in Hamilton.

After working for the Investors Group and as a regional manager for Regal Capital, Mr. Lee-Chin purchased AIC Limited for $200,000 in 1986. At the time, the company had $800,000 in assets. The fund currently manages $11.7-billion in assets.

Last year, the entrepreneur acquired 75% interest in NCB Jamaica Ltd., the country's largest bank. Mr. Lee-Chin was named the 14th wealthiest Canadian by Canadian Business magazine in 2001 and this year, he was declared the 303rd wealthiest person in the world by Forbes magazine.

The billionaire was kept from attending the announcement of his donation by a sudden personal emergency (he later said the problem had been resolved). However, in his prepared remarks for the event, he reflected upon his rise from poverty and his reasons for asking the atrium be named for his mother.

"My first playpen was a cardboard box. My mother taught me so many things: respect, love, empathy, charity. But I have one thing above all others to thank my mother for. She helped me understand that while there are many hardships in life, they can all be overcome; but there is really one type of poverty that can't be overcome -- poverty of the spirit -- and that, thanks to my mother, we never knew. From the cardboard box to the Crystal court -- it's been quite a journey."

The ROM is Canada's largest museum of natural history and human cultures, with more than five million objects in its collections and galleries showcasing art, archeology and science.         - James Cowan      National Post      6 Apr 2003

Billionaire Michael-Lee Chin is a national hero in his native Jamaica and a well-known businessman in his adopted Canada, where he runs Canada's 11th-largest mutual fund company, AIC Ltd. But after tasting his first 15 minutes of fame in the United States this year, he's hungry for more south of the border.

In January, he struck a $214-million deal to buy 75% of a Jamaican bank, which caught the attention of The New York Times, Forbes and other major U.S. publications that rarely cover Canadian businesses, let alone AIC.

Mr. Lee-Chin says the publicity influenced his next big deal four month later: buying San Francisco-based Elijah Asset Management, subadvisors for AIC on one of its technology funds.

"We're getting a lot of media exposure in the U.S.," Mr. Lee-Chin says. "My assumption is that interest will translate to people wanting AIC to be their investment adviser."

Back in 1999, Elijah managed about $1-billion in assets, but it has since suffered a steady flow of redemptions because it is focused on the technology sector.

"We've had many requests from Americans to buy our funds, but they can't because of securities rules," he says. "This is a way for us now to create AIC America and give our Canadian products access to that marketplace. As [Elijah is] being built the interest will be heightened by Americans to invest in us."

Expanding in the U.S. is an ambitious goal shared by several financial institutions angling for growth beyond the mature Canadian market. Most of the Big Six banks have, to varying degrees, expanded into the U.S. or at least talked about it. But few Canadian asset managers have looked southward.

"It's not an easy market to enter as a small player," says one analyst. "The U.S. market has smaller margins, more competition and stronger brands."

But Mr. Lee-Chin is brimming with confidence from his rags-to-riches success in Canada. He launched Burlington, Ont.-based AIC in 1987. Fueled by his fervent belief in the style of investing legend Warren Buffett, Mr. Lee-Chin built a once tiny company with $1-million in assets into a major player in Canada's investment industry.

He ranks No. 18 on the Financial Post's list of Canada's wealthiest people with an estimated net worth of $1.71-billion.

"If I wasn't prescient then looking forward, I'm not prescient now looking forward," he says. "But if we stay disciplined and apply ourselves everyday, great things will happen."

Last year, the mutual fund entrepreneur hooked up with fund management giant Caisse de dépôt et placement du Québec in a bid to seize control of Mackenzie Financial Corp., but was beat out by a $4.15-billion friendly offer from Investors Group Inc., controlled indirectly by Paul Desmarais (No. 8 on the list). With few other major assets available to acquire in Canada, Mr. Lee-Chin has turned his attention to the U.S.

What triggered all the press coverage in the U.S. was Mr. Lee-Chin's acquisition of Jamaica's National Commercial Bank. Although he is Jamaican and is deeply interested in improving the country's economic prospects, the acquisition seemed out of step with the rest of his business.

"This investment in Jamaica is an unusual one for us to make because you don't see Jamaica as place people normally invest," he concedes. But the bank and the country have enormous potential, he argues.

Bank of Nova Scotia's Jamaican subsidiary, the largest bank in the country, generated a $109-million profit in 2001, about 5% of the bank's consolidated net income in 2001. Scotiabank has 42 branches and two million customers in Jamaica.

By comparison, National Commercial Bank's 50 branches earned about $7-million in its most recent quarter. Nonetheless, Mr. Lee-Chin has said he intends to grab 80% market share.

Major banks in Caribbean produce revenue ranging between $300-million to $350-million, he says, and have a market value of US$290-million to US$900-million. NCB's revenue is about 20% lower than the largest banks, but its market value is only one-third.

"If we can, which we will, make the bank more efficient, we see no reason why NCB should be selling at one third the price. It will augment our reputation as being good investors," he says.

Mr. Lee-Chin figures AIC's "buy, hold, and prosper" philosophy and record of steady success in Canada will also resonate with U.S. investors.

AIC's Advantage Fund, which is dominated by investments in Toronto-Dominion Bank, Loblaw Companies Ltd. and Berkshire Hathaway Inc, has produced a 10-year return of about 17% and a 15-year return of roughly 13%.

The S&P/TSX composite index produced respective returns of 10.8% and 7.6%.

"It's not a Canadian success story. It's a success story by any standard," Mr. Lee-Chin says. "It's just that Americans don't know it yet."  - by  Sean Silcoff and Keith Kalawsky  National Post  25 May 2002

His future remains crystal clear
Q&A with Michael Lee-Chin

Michael Lee-Chin's worth is estimated at more than $2-billion, and his name is now tied to the controversial addition to the Royal Ontario Museum, but the chairman of Portland Holdings Inc. and executive chairman of AIC Ltd., is never far from his roots. Born in Port Antonio, Jamaica in 1951, the oldest of nine children, the entrepreneur operates his businesses by a simple philosophy: Prosperitas cum caritate (not only do well, but also do good). In this season of giving,  the Financial Post spoke with Mr. Lee-Chin about philanthropy.

Q: When it comes to giving back and the causes you choose to take on, what motivates your philanthropy?

A: One crystallizing experience summarizes my outlook. It was March 19, 2002. I was in Kingston, Jamaica, at the Ministry of Finance office. I was just about to write the cheque to buy the National Commercial Bank of Jamaica, a bank that dates back to 1837.

I was with my entire family; mother, father, eight siblings. Cameras were there to document the moment. I remember thinking, how is it possible for the son of an orphan, the son of parents who were clerks in a supermarket to buy the National Commercial Bank of Jamaica? In that moment, I realized it was possible for reasons I had little to do with. I did not choose the country in which I was born. I was blessed. Jamaica nurtured me to be a confident person. It was only by the grace of God that I was not born in a country that immediately truncated my future and my confidence.

I did not choose my parents. I was blessed to have been born to parents who had high expectations of me, who nurtured me, who led by example, who had a value system.

I did not choose the era in which I was born. I was blessed. Had I been born 250 years ago, I would have been a slave, and would not have had the opportunity to own anything. I would have been a chattel.

For all those reasons, I am who I am. Given that I had no choice in those situations, I said to myself right there and then: Mike, you have to make sure you use your podium in such a way that improves the lot of people who have not been as lucky as you. That was a moment that crystallized my life and defined my motivations.

Q: When did you begin getting involved in philanthropy?

A: I did not just wake up one day and become a philanthropist. Being the eldest of nine and having my parents work three jobs, meant I shouldered responsibility very early. When you sleep in the same bed with your three brothers, you have to share. That was the beginning of my paternalistic and compassionate attitude.

Q: Why is giving back important to you personally?

A: All of us at some point in our life have to ask the question: What is the legacy I am going to leave? When you start from this premise and then articulate to yourself what you want that legacy to be, it will dictate your behaviour today. If more of us started to think about our legacy, it would force us to think long term and put our life in context.

To me a fulfilled life would be to do well professionally, to do well in terms of being a role model and at the same time share my experiences, blessings, wealth in a way that is positive and motivating to others.

Q: When it comes to giving back, where do you focus your energies?

A: Education is extremely important to me because I would not be here today had I not received scholarships. Education is a passport. It's an equalizer.

That is my focus. Here in Canada, at the Rotman School of Business, there is the AIC Institute of Corporate Citizenship. At McMaster, there is the AIC Institute of Strategic Studies at the MBA level. In Jamaica, through the bank, we own a credit card, therefore, we don't have to make royalty payments to Visa or MasterCard. We are taking those savings and plowing them back into education.

Q: What is it like looking up at the ROM's Michael Lee-Chin Crystal and walking through the atrium court named after your mother, knowing you have made such a significant contribution to your adopted city?

A: It's humbling. It brings me back to where I come from and it reinvigorates my motivation. When it was being constructed, I would go down to Toronto twice a month with my family and watch as it went up. I feel fortunate because every single immigrant who passes through the threshold of the Michael Lee-Chin Crystal will have a sense of connection. It will inspire them [and make them] realize this country gives opportunities to everybody. It's not just for those who have been here for generations.

Q: What would you say to young entrepreneurs about philanthropy?

A: Being considerate, paternalistic toward your community, looking out for your fellow man should not be forced. If it is, you are doing it for the wrong reasons. But if you see yourself as building a legacy that will resonate with your children and society in terms of community-building, it becomes easy and natural. If you are giving to get, eventually you will be unmasked.

But there are natural benefits as well. At the end of the day, all of us should be trying to build a reputation. There are long-term benefits of being seen as someone with a heart and soul. Because most businesses are perceived as being cold and bottom-line oriented, at the end of the day, I don't think a business will succeed inter-generationally if it is not seen shouldering its responsibility to the community.   - 2007 December 24   Financial Post

 


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