Independent wealth manager CI Financial CIX-T is back on the acquisition trail as it scoops up two wealth management businesses – one on each side of the border – adding more than $3.8-billion in client assets.
On Thursday, CI announced the purchase of Montreal-based Coriel Capital Inc., an ultra-high-net-worth office with $1.3-billion in client assets. On the same day, in the company’s second quarterly earnings report, CI revealed it had also purchased San Antonio-based Intercontinental Wealth Advisors, a registered investment advisory business with US$1.7-billion in client assets.
No financial details were made public for either transaction.
Over the past three years, the Toronto-based investment giant has been on an acquisition spree, buying more than 30 Registered Investment Adviser firms scattered across the U.S. – including Avalon Advisors and La Ferla, two U.S. firms that combined manage almost $12-billion in assets.
RIAs typically follow an independent business model – meaning they are not part of a larger brokerage like many Canadian advisers – and U.S. advisers have a legal fiduciary obligation to act in the best interests of clients.
CI’s total assets under management reached $398-billion as of June 30, up 20 per cent from a year ago.
Coriel Capital will be added to CI’s Canadian private wealth management arm, which will have total assets of approximately $83.9-billion following the close of the deal.
Intercontinental Wealth Advisors will join CI’s U.S. wealth management arm, which was rebranded last week to Corient Private Wealth LLC. The new name derives from an existing CI-owned RIA based in California. Corient Private Wealth manages about $193-million in assets.
Last year, CI slowed down its aggressive acquisition strategy in the U.S. as it paused plans to spin out the U.S. division and take it public.
But rather than launch an initial public offering during uncertain market conditions, the investment giant sold a 20-per-cent stake in its U.S. wealth management business for $1.34-billion, with an aim to pay down some of the $4.4-billion in debt it held at the end of 2022. The structuring of the financing deal caused several analysts to downgrade CI, stating it was far more costly than initially believed.
On Thursday, chief executive officer Kurt MacAlpine said in a statement that the company repaid $1-billion in debt – hitting its quarterly goal of “materially deleveraging” the company. CI also used proceeds from the sale of a minority stake in Congress Wealth Management LLC to pay down debt.
Mr. MacAlpine noted the company returned $229-million to shareholders by buying back 17 million shares, at an average cost per share of $13.51.
CI’s board of directors also announced an increase of two cents to its quarterly dividend to 20 cents per share, payable on Jan. 15.
The company reported revenue of $776-million for the quarter ending June 30, up from $567-million for the same quarter in 2022. Adjusted net income for the quarter – a measure that strips out certain items, including acquisition costs – was $136-million, or 76 cents a share, down from $149-million, or 78 cents, for the second quarter in 2022.
CI’s Canadian retail asset management business saw slightly positive net sales of $7-million for the quarter, compared with $381-million of net redemptions for the same quarter last year.
However, company expenses almost doubled – jumping to $664-million for the quarter, up from $348-million a year prior. In an earnings report, CI cited U.S. acquisitions and higher stock-based compensation as reasons for the higher costs.
Clare O’Hara