Skip to main content
Open this photo in gallery:

“Post-IPO, our Canadian business will trade exclusively on the Toronto Stock Exchange, and our U.S. business will trade exclusively on a U.S. exchange,” said CEO Kurt MacAlpine, seen here on Dec. 20, 2019.Tijana Martin/The Globe and Mail

CI Financial Corp. says it plans to file for a stock offering for its U.S. wealth-management business later this month, the next step in a plan to divide the company into two businesses, one on each side of the border.

The plan includes delisting the current company’s shares from the New York Stock Exchange, chief executive officer Kurt MacAlpine told CI investors Thursday on the company’s earnings call.

“Post-IPO, our Canadian business will trade exclusively on the Toronto Stock Exchange, and our U.S. business will trade exclusively on a U.S. exchange,” Mr. MacAlpine said. “The listings will be reflective of the primary market that each business operates in.”

Toronto-based CI said the plan also may include selling a larger proportion of the U.S. business than previously planned, with an eye toward reducing the pile of debt the company has accumulated in executing the shift.

Thursday’s news is the latest in Mr. MacAlpine’s grand plan to transform CI, a long-time giant in the Canadian fund and asset-management industry. CI has aggressively expanded into the United States by purchasing more than two dozen registered investment adviser firms.

The transition moves CI away from managing and marketing retail mutual funds to Canadians, toward owning investment advisers that collect fees for providing advice to wealthy clients.

CI has spent an estimated $2.85-billion on wealth management acquisitions since the beginning of 2021, a figure that includes cash, shares and the initial estimates of performance-based payments to the owners of the firms.

It has nearly $4-billion of debt, which will remain with the Canadian company after the IPO of the U.S. wealth business.

Ultimately, CI plans to “effectively privatize” the Canadian business via share buybacks, Mr. MacAlpine said. He did not offer a timeline for that step.

“Post-IPO, the Canadian business will not fund any future U.S. acquisitions, and that business will not pursue any meaningful M&A opportunities,” Mr. MacAlpine said, referring to mergers and acquisitions.

The U.S. business will be debt-free, but will owe the promised performance-based payments to owners of the firms it has acquired over the past two-plus years. “With the U.S. business in growth mode, we do not anticipate paying a dividend,” Mr. MacAlpine said, with cash flows used for more acquisitions.

CI had originally said it would sell 20 per cent of the U.S. business and keep 80 per cent. But, “there was never a stated intent of sitting on an 80-per-cent stake forever,” Mr. MacAlpine said. “The intention was always to be flexible.”

CI shares were up nearly 7 per cent in Thursday’s trading, closing at $14.49 on the TSX.

In the quarter ended Sept. 30, the U.S. wealth management business contributed $164.1-million in revenue, more than the $129.2-million from the Canadian wealth-management business and approaching the $267.5-million from its legacy asset-management segment. U.S. wealth-management has gone from about one-fifth of CI’s revenue to about one-third in the past year.

CI’s third-quarter profit of $14.4-million was down from $45.4-million in the same period last year. Asset and wealth managers generate revenue from fees that are based on the value of the assets they manage; when markets fall, their revenue and profits typically fall as well.

Report an error

Editorial code of conduct

Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 18/03/24 1:05pm EDT.

SymbolName% changeLast
CIX-T
CI Financial Corp
+0.3%16.91

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe