CI Financial Inc. is making its first foray into the private real estate sector with a joint venture interest in Axia Real Assets LP, a newly formed alternative investment manager focusing on global real estate and infrastructure.
CI announced the new venture on Tuesday along with industry veterans and Axia co-founders Kelsey Boland, Darrell Shipp, Greg Stevenson and Joshua Varghese, a former CI portfolio manager.
No financial details were released by either company, but Axia will be independently operated and managed by its four partners. Prior to the deal, CI had only stepped into real assets by offering larger institutional investors access to private real estate funds and private equity and credit.
The new venture will now allow retail investors access to private real estate opportunities that are typically hard to access, said Mr. Varghese, who managed a multibillion-dollar portfolio of global real estate equities at CI Global Asset Management for more than a decade.
Over the past 18 months, CI chief executive officer Kurt MacAlpine has been rapidly expanding CI through acquisitions in its wealth management business, as well as boosting its alternative investment arm to include alternative exchange-traded funds, cryptocurrencies and private-fixed income.
“The products people are buying today are very different from what they bought 10 years ago and they will be different five years from now,” Mr. MacAlpine said in an interview. “We are trying to be relevant to wherever Canadians want to invest – and today that includes real assets.”
With more than $3.7-billion in liquid alternative funds, CI offers retail investors access to publicly listed real estate investments through mutual funds and ETFs – as well as a private real estate fund for accredited investors.
Mr. MacAlpine said along with the growth of CI’s wealth management business, which has doubled its assets under management compared with a year ago, “the demand for both liquid – and illiquid – real estate has also increased from both institutional and retail investors.”
Rather than expand through acquisition, Mr. MacAlpine spent several months last year discussing the new joint venture with Mr. Varghese, who left his role at CI last November to start building Axia.
Mr. Varghese was joined by several former Slate Asset Management executives, including Mr. Stevenson who was the former CEO of the Slate Retail real estate investment trust, which invested in U.S. retail properties anchored by grocery stores.
“Right now what we are seeing is a lot of the interesting opportunities in real estate that are based on the emergence of the new economy – whether it’s e-commerce warehouses, grocery stores, or data centres – and are hard to access for a lot of investors, both retail and institutional,” Mr. Stevenson said in an interview.
“As investors continue to diversify their portfolios to accumulate long-term wealth, we believe the opportunities for global real assets are significant.”
In addition to grocery-anchored real estate, which includes big-box grocery stores, other areas of interest to the firm, said Mr. Varghese, include life-science facilities, cold-storage facilities and single-family rental homes.
Mr. Varghese declined to comment on the company’s initial investment capital, but said he expects to launch the first set of investment products this summer.
“We think because of digitization and because of what that is going to do to enable societal change, we are going to see bigger changes in the next two decades than we saw in the last two decades,” Mr. Varghese said.
“When you are investing in real estate – which is a long-term asset class – you have to have a laser focus view on what those changes will look like and [the areas we are looking] will provide our investors access to the types of real estate that are going to benefit from the new economy.”
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