Canadian manager CI Financial has agreed to sell a 20% minority stake in its U.S. wealth management business to a group of institutional investors, including a wholly owned subsidiary of the Abu Dhabi Investment Authority, Bain Capital, Flexpoint Ford, Ares Management funds and the Wisconsin Retirement System, among others.
The transaction is valued at about C$1.34 billion ($1.0 billion), said a Thursday release. At closing, CI Financial will hold 80% of the U.S. wealth management unit, with the other investors holding the remaining 20% in the form of convertible preferred equity.
The proceeds from this investment — together with the proceeds from another recent asset sale — totaling some C$1.5 billion, will be used to "deleverage and reduce CI's net leverage ratio from 4.0x to 2.7x when accounting for the earnings reduction associated with the minority investment," the release noted.
Upon closing of the transaction, which expected in late May 2023, a six-member board of directors will be formed to oversee the U.S. wealth management unit, comprising five members nominated by CI Financial and one member nominated by the other investors.
"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 Financial, in the release. "Following the announcement of the submission of our IPO registration statement with respect to the U.S. business, we received significant inbound interest from leading institutional investors."
CI Financial manages and advises on approximately C$391.1 billion in client assets.