Bain, Abu Dhabi Buy Stake in CI Financial’s US Wealth Unit - Bloomberg
Canadian asset manager CI Financial Corp. is selling a 20% stake in its US wealth management unit to a group of investors including Bain Capital and Abu Dhabi Investment Authority.
The $1 billion investment gives the business an enterprise value of about $5.3 billion, CI said in a statement Thursday. The deal was reported first by the Wall Street Journal.
For CI, the transaction means immediate financial relief, allowing the firm to pay down some of the debt it accumulated when it acquired dozens of wealth management offices across the US. It immediately announced an offer to repurchase bonds due in 2024, 2025 and 2027.
The Canadian financial firm announced plans last year to take the US division public, but has shelved the IPO for now.
“We capitalized on an opportunity to accomplish in the private markets the objectives we sought in the IPO – value creation for our shareholders, an infusion of capital to materially deleverage, and the opportunity to build relationships with leading long-term investors,” CI Chief Executive Officer Kurt MacAlpine said in the statement.
CI’s net leverage ratio will fall to 2.7 times from 4 times, the company said. The firm’s stock market value, including both its US business and its profitable Canadian fund management arm, was just C$2.3 billion ($1.7 billion) as of Wednesday’s close. The company has been buying back shares, but executives have been frustrated at its low valuation as the market has grown more concerned about the debt.
“The CI board is thrilled by the outcome of this transaction, which creates substantial value for our shareholders and represents an attractive alternative to an IPO of CI US,” Chairman Bill Holland said in a statement. “We have retained majority ownership of CI US while partnering with world-class investors and adding new directors at CI US.”
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