Canada’s CI Financial Goes Private In C$4.7 Billion Deal
The Toronto-listed banking group, operating in Canada and the US and also a significant acquirer of wealth management businesses, is going private. A Middle East-based sovereign wealth fund is acquiring the lender. This story also underscores a trend of wealth-related firms moving off public markets, or choosing to avoid IPOs.
Canada-listed CI
Financial is being taken private in a C$4.7 billion ($3.36
billion) deal with Abu Dhabi-based Mubadala Capital giving the
group a C$12.1 billion enterprise value.
Once the transaction is complete, CI will continue to operate
with its current structure and management team and will be
independent of Mubadala Capital’s other portfolio businesses, CI
said in a statement yesterday. (Mubadala Capital is the asset
management arm of Abu Dhabi’s sovereign wealth fund.)
Mubadala Capital has bought CI’s issued and outstanding shares in
cash for C$32 per share, a 33 per cent premium to the closing
price prior to the announcement of the deal, and a 58 premium to
the 60-day volume-weighted average trading price on the Toronto
Stock Exchange.
(US correspondent Charles Paikert notes: It appears Mubadala
is following the playbook of Clayton, Dubilier & Rice, the
private equity house that took Focus Financial private last
summer, taking it off public markets. Dan Glaser, operating
partner at the PE firm,
explained his reasoning for that deal to attendees at last
week’s IMPACT conference in San Francisco. A trend
seems to be in place of investors in wealth management
avoiding public markets. In addition to Focus getting out, St
Petersburg-headquartered Dynasty decided not to attempt an IPO
this year.)
CI Financial has made its name in the North American wealth
sector as a large buyer of RIAs in recent years, although it
subsequently sold a minority stake in its US business (see
article
here). In the US, the organization operates as Corient, a
brand it adopted in August 2023. This business will operate
independently under that brand. Since CI Financial entered
the US RIA sector in 2020, it has become one of the industry’s
fastest-growing wealth platforms through acquisitions and organic
growth. The Canadian interloper stunned the American RIA
business in 2020 and 2021, gobbling up over two dozen high
quality advisory firms with more than $175 billion in assets
under management.
CI’s board of directors, with interested directors abstaining,
unanimously recommended the transaction. The recommendation
followed the unanimous recommendation of a “special committee” of
the board.
“This transaction, with its significant cash premium, represents
an exceptional outcome for CI shareholders and provides certainty
to shareholders while CI pursues its ongoing transformation,”
William E Butt, CI’s lead director and chair of the special
committee, said. “It also provides significant benefits to
Canada, by providing long-term capital to underpin the building
of a Canadian champion in the wealth and asset management
industries.”
“Mubadala Capital invests with a long-term outlook and represents
long-term capital – providing stability and certainty for CI’s
clients and employees,” Kurt MacAlpine, CI’s CEO, said.
Oscar Fahlgren, chief investment officer of Mubadala Capital,
said: “We look forward to partnering with CI’s talented team to
capitalize on new opportunities in the asset and wealth
management sectors and build on the company’s
successes.”
Canada
CI will remain headquartered in Canada and existing operations
and structure in Canada will stay in place. This includes
maintaining CI’s existing technology and data protection
practices, including maintaining all personal data in Canada for
Canadian operations, it said.
The transaction is also subject to court approval, regulatory
clearances and other customary closing conditions. The
transaction is not subject to any financing condition and,
assuming the timely receipt of all required regulatory approvals,
is expected to close in the second quarter of 2025.
MacAlpine expects to roll all his equity in the transaction and
other members of CI’s senior management holding an aggregate of
up to 1.5 per cent of CI’s shares, which are also expected
to have the chance to enter into equity rollover agreements to
exchange their CI shares into a new holding vehicle. In addition,
chairman William Holland may roll 25 per cent of his total CI
holdings in the transaction. All rollovers will occur at a value
equal to the cash purchase price, CI said.
Each of CI’s directors and executive officers or entities
controlled by them, which own or control an aggregate of
approximately 16.88 per cent of CI’s outstanding shares, have
entered into a voting and support agreement with Mubadala Capital
agreeing to vote their shares in favor of the
transaction.
INFOR Financial, which is acting as exclusive financial advisor
to the special committee, was paid a fixed fee for its services
and is not entitled to any fee that is contingent on the
successful completion of the transaction. Wildeboer Dellelce LLP
is serving as legal advisor to the special committee. Stikeman
Elliott LLP and Skadden, Arps, Slate, Meagher & Flom LLP serve as
legal advisors to CI. RBC Capital Markets is also an advisor to
CI.
Jefferies Securities acts as lead financial advisor to Mubadala
Capital and Blake, Cassels & Graydon LLP and Latham & Watkins LLP
serve as legal advisors to Mubadala Capital. FGS Longview acts as
strategic communications and public affairs advisor to Mubadala
Capital. BMO Capital Markets is also an advisor to Mubadala
Capital, the statement added.
As reported
here, reported adjusted net income at CI Financial was
C$141.2 million ($100.6 million) for the third quarter of 2024,
up from C$132.8 million a year earlier. Total client assets,
including its Canadian and US wealth management businesses, stood
at $518 billion at September 30, up from C$420.9 billion a year
before.