Will RIA Sellers Want CI Financial’s Stock?

The Canadian asset manager plans to list its shares on the NYSE and use them to buy wealth management businesses.

(Michael Nagle/Bloomberg)

(Michael Nagle/Bloomberg)

CI Financial Corp., a publicly traded wealth and asset manager in Toronto with $202 billion in assets, plans to list common shares on the New York Stock Exchange, in part to make it easier to buy RIAs using its stock.

The Canadian company has already applied to list its shares on the exchange and filed a registration form with the Securities and Exchange Commission Nov. 4.

CI Financial CEO Kurt MacAlpine joined the company last year and was given a “flexible mandate” to change the strategic direction of the company, he told RIA Intel. To grow it beyond the limitations of its domestic market, MacAlpine is working to modernize its asset management business and is rapidly expanding its wealth management business. Since February, CI Financial has acquired part or all of 11 RIAs in the U.S. that manage an aggregate of more than $14 billion. Acquiring half that many RIAs in a full year would be considered a busy one.

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The company is currently capable of and open to including equity in deals, but it would be granted in Canada and lead to a potential currency risk to a U.S. shareholder. Listing shares on the NYSE makes equity a more attractive option for sellers — if they want them.

Shares of CI Financial (TSE: CIX) ended Thursday’s session on the Toronto Stock Exchange at C$16.10 — effectively the price they fetched 20 years ago. Its performance has lagged other financial services companies.

But MacAlpine’s vision for the company is resonating with RIA sellers and they are interested in transactions that include CI Financial stock, he said.

Unlike some RIA acquirers that primarily serve as a financial backer, or others that acquire practices and make advisors new employees of an RIA, CI Financial is doing neither. “I recognize that every deal doesn’t necessarily need to be the same thing,” MacAlpine said, and word of his willingness to be flexible is fueling momentum and interest in CI Financial.

The RIAs it has acquired remain independent boutiques and are free to use the custodians and service providers they choose. They also dictate the nature of their transactions. “I’ll buy 100% of the business. I’ll buy less than 50% percent… it’s up to the seller.”

Wealth managers are also more comfortable with CI Financial as an owner with “permanent, strategic capital” and the ability to raise debt as needed. “We’re the most well-capitalized buyer in the space,” he said.

Most of CI Financial’s new asset growth has stemmed from its wealth management business, which MacAlpine expects will continue and should benefit the company and shareholders. In recent years, asset managers have faced headwinds while wealth managers have boomed and those trends are expected to continue. “Those multiples have flipped completely,” MacAlpine said. “I haven’t had anyone say, your stock hasn’t performed over the last few years, we don’t want it.”

Offering CI Financial’s shares in the U.S. will also broaden its investor base and further raise its corporate profile. In January, bankers were mixed about Canadian buyers’ appetites for RIAs, but wealth managers are fast-recognizing CI Financial.

“My goal is to have the leading, independent private wealth platform in the U.S,” the chief executive said. As long as there are good ones for sale, he’ll keep buying.

Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.

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