CI Financial Corp. outlined a plan to reduce debt and split its U.S. and Canadian businesses as the fund manager tries to rebuild investor confidence in its growth strategy.
CI plans to file an S-1 registration this month for the planned initial public offering of its U.S. wealth management unit. The firm said it will use proceeds from the IPO to improve its balance sheet, which had nearly C$4 billion ($3 billion) in debt as of Sept. 30, and the Toronto-based parent won’t fund future acquisitions for the U.S. division.
“The plan for our business is to de-lever,” Chief Executive Kurt MacAlpine said on a conference call with analysts Thursday. The U.S. IPO will happen “when the market conditions present themselves.”
CI shares jumped as much as 6% in Toronto, their biggest intraday increase since August.
The fund manager’s borrowing, built up as it went on an acquisition spree of U.S. registered investment advisory firms over the past few years, has become an issue for analysts and investors. In April, S&P Global Ratings cut CI’s debt to BBB-, one level above junk.
The goal is to bring the company’s net leverage ratio to 1.5 to 2, MacAlpine said. At the end of the third quarter, net debt was about 4 times adjusted earnings before interest, taxes, depreciation and amortization.
MacAlpine and the board have defended the U.S. wealth deals as necessary for the company’s future, given the lack of growth opportunities in its home market. The latest iteration of the strategy involves effectively splitting the Canadian and U.S. businesses.
The Canadian unit, which is focused on managing mutual funds for retail investors and providing wealth management services to affluent clients, will take on all of the company’s debt after the separation. It will be delisted from the New York Stock Exchange and traded only in Toronto.
The U.S. unit, which has C$149 billion in client assets, will be listed only on a U.S. exchange and will fund its future acquisitions by using its own balance sheet or shares.
CI Financial had C$400 million in short-term debt as of Sept. 30, with about C$750 million in bonds coming due in 2024 and 2025, according to financial statements.
The company reported adjusted earnings of 73 Canadian cents a share in the third quarter, matching analysts’ estimates.
While industry statistics pointing to a succession crisis can cause alarm, advisor-owners should be free to consider a middle path between staying solo and catching the surging wave of M&A.
New joint research by T. Rowe Price, MIT, and Stanford University finds more diverse asset allocations among older participants.
With its asset pipeline bursting past $13 billion, Farther is looking to build more momentum with three new managing directors.
A Department of Labor proposal to scrap a regulatory provision under ERISA could create uncertainty for fiduciaries, the trade association argues.
"We continue to feel confident about our ability to capture 90%," LPL CEO Rich Steinmeier told analysts during the firm's 2nd quarter earnings call.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
