Manulife Financial has signed an agreement to acquire AIC's Canadian retail investment fund business.

Under the agreement, Manulife Mutual Funds would manage all AIC funds in Canada and AIC would continue to act as a fund sub-adviser for Manulife Mutual Funds.

"This is a great fit for Manulife and AIC," says Paul Rooney (pictured), president and chief executive officer, Manulife Canada. "When coupled with Manulife's solid wealth management services, this agreement will strengthen our already strong product line-up that meets the needs of investors and their advisers."

Michael Lee-Chin, executive chairman of AIC, adds: "This sale reflects our overall strategy to return to our roots of managing money and concentrate on our investment advisory services. We are committed to ensuring our clients continue to receive high-quality service and are very pleased that Manulife Financial is the purchaser of our retail fund business, since they share our passion for providing advisors and clients with a broad array of products and services."

Once complete, the acquisition of AIC funds by Manulife will create significant scale and presence in the retail investment fund market. Overall retail fund assets under management for Canadians would grow to approximately CAD13.7bn.

The transaction is subject to regulatory and stock exchange approvals and certain fund unit holder approvals. Securities exchangeable into common shares of Manulife Financial will be issued in satisfaction of the purchase price. The transaction is expected to be accretive to Manulife earnings.