CI Financial to Sell 20% Stake in US Wealth Management Unit for $1B
A group of investors including Bain Capital LP, Abu Dhabi Investment Authority (through a subsidiary), Flexpoint Ford, Ares Management and the state of Wisconsin have bought a 20% stake in Canadian asset manager CI Financial Corp.‘s US wealth management unit – CI Private Wealth.
The group is making an approximately $1 billion cash infusion, giving the business an enterprise value of about $5.3 billion, according to the firm.
The asset manager began rapidly purchasing US-based registered investment advisor firms in late 2019, building its US wealth management business, which reached $187.5 billion in assets by the end of March 2023. The transaction will help the firm reduce debt incurred through these acquisitions.
The money together with proceeds from another recent (undisclosed) asset sale total $1.5 billion and will be used to “deleverage and reduce CI’s net leverage ratio from 4.0x to 2.7x.”
CI started proceedings for an initial public offering for its US wealth management business late last year.
“We initiated an IPO process for our U.S. wealth management business in late 2022 because we believed our share price did not reflect the value we had created for our shareholders across both our Canadian and U.S. businesses,” said Kurt MacAlpine, Chief Executive Officer of CI.
The IPO now appears to be on hold.
“We capitalized on an opportunity to accomplish in the private markets the objectives we sought in the IPO – value creation for our shareholders, an infusion of capital to materially deleverage, and the opportunity to build relationships with leading long-term investors,” continued MacAlpine.
CI’s debt has grown to around $2.9 billion as of the end of April, or nearly triple of what it owed in 2019. This prompted S&P Global Ratings to downgrade CI’s debt to junk earlier this month, after CI requested the agency withdraw its ratings.
