CI Financial posts record profits as it moves beyond just buying RIAs

After acquiring 25 U.S. RIAs over the past 24 months, the Toronto-based aggregator is taking a minority stake in GLASfunds, a $1 billion alternative investments platform.

CI Financial paired the reporting of record third-quarter financial results with the news that it is expanding beyond its pattern of acquiring registered investment advisers by taking a minority stake in alternative investments platform GLASfunds.

The investment in the $1.1 billion Cleveland-based alts platform marks the 26^th U.S. acquisition made by the Toronto-based aggregator since it entered the market 24 months ago, and further bulks up its private wealth business.

CI, which has grown to approximately $95 billion worth of U.S. RIA assets and $271 billion in total assets, reported a 65% increase in assets under management over the 12-month period ending Sept. 30.

In U.S. dollars, the company reported adjusted net income of $126.1 million on total revenues of $526.3 million in third quarter. That compares to net income of $106.1 million on total revenues of $405.5 million during the same quarter last year.

“It was another record financial quarter for CI and included a new all-time high for asset levels and the best net flows in our asset management business in over six years, reflecting the successful ongoing transformation of our company,” CI Chief Executive Kurt MacAlpine said in a statement.

“In U.S. wealth management, we are seeing many of the country’s largest and most successful registered investment advisers choosing to join CI, attracted by the exceptional businesses we have in place and our vision for a national platform,” he said.

The third-quarter performance data don’t include the completion of one deal since the quarter ended or three announced acquisitions, including GLASfunds, which is different kind of deal for CI.

The alternative investments platform, launched in 2009, offers access to about 200 different private equity funds, hedge funds and other alternative strategies to investors who qualify as having a net worth of at least $5 million.

“Alternative assets are an increasingly important part of investing today and having an execution platform like GLASfunds is a critical foundational component to our strategy in this space,” MacAlpine said. “Making this investment will enable us to deliver a better client experience, which is incredibly important as we work to build the leading high-net-worth and ultra-high-net-worth wealth manager in the U.S.”

The GLASfund deal marks CI’s first U.S. acquisition outside of the traditional financial advisory space. And while it is being promoted as an expansion of CI’s private wealth arm, the minority investment is more akin to a private equity infusion for the alts platform.

Michael Maroon, managing partner at GLASfunds, balked at the comparison to a private equity investment and said the partnership will provide CI’s advisers access to the platform. But the platform is already available to RIAs generally and will continue to be after the deal closes later this year.

“They looked at us as a really good delivery mechanism,” Maroon said. “It’s strategic for us in that we get to call on the CIPW family and serve them.”

Until now, he added, the platform has relied on “good old-fashioned sales.”