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.
To achieve contentment, advisors should think twice before selling their firms for the biggest dollar amount.
San Diego broker-dealer giant picks up California-based Sierra Ridge and its roughly 40 advisors, who had been affiliated with LPL for just over a year.
Advisors chase asset transfer, but the next generation decides whether the relationship survives it too
FSB, FINRA and Canada's OSFI have each flagged AI as a threat to financial stability, citing stretched valuations, rising retail leverage and cyber vulnerabilities
New research finds 67% of US adults support broader access to AI investment opportunities, amid inequality concerns.
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
