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.