CI Financial Corp., a publicly traded wealth and asset manager in Toronto with $182 billion in assets, said Monday it acquired another large RIA and doubled its U.S.-based assets under management to $46.1 billion.
Moments after the market closed, CI Financial announced it bought Segall Bryant & Hamill, or SBH, an RIA headquartered in Chicago that manages $23.1 billion for institutions and wealthy individuals. SBH also manages its own investment funds. Terms of the deal were not disclosed.
Shares of CI Financial (NYSE: CIXX) ended Monday’s session at $12.91 — roughly where it traded 20 years ago. Its performance has lagged other financial services companies.
The deal marks a “major step forward” in the company’s U.S. expansion, CI Financial CEO Kurt MacAlpine said in a statement.
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Since the start of 2020, CI Financial has been one of the most prolific buyers of U.S. wealth management businesses, with 14 deals including SBH. But the latest acquisition meaningfully grew its U.S.-based assets under management from about $23 billion to over $46 billion, as well as its geographical footprint. Founded in Chicago in 1994, SBH now also has offices in Denver, Philadelphia, St. Louis, and Naples, Fla.
Some RIA acquirers primarily serve as a financial backer to independent (either literally or by nature) subsidiary firms. Others are wealth managers themselves, acquiring practices and tucking them in. CI Financial is doing neither. It acquires minority or majority stakes in RIAs (or buys them outright) and the RIAs can remain independent boutiques, free to use the custodians and service providers they choose. But CI Financial intends to create some kind of central platform and suite services advisors can leverage, if they choose.
“I recognize that every deal doesn’t necessarily need to be the same thing,” MacAlpine told RIA Intel in November.
The platform doesn’t exist yet, but sellers believe there are benefits to be had in the meantime. “Our clients will benefit from the synergies that result when like-minded organizations leverage their talents and resources to enhance the client experience. CI is a strong strategic partner for SBH, providing the capital resources of a large, global investment firm while allowing us to retain our client-centric approach. We are excited to become part of the growing CI family of companies,” Philip Hildebrandt, CEO of SBH, said in a statement about the deal.
Wealth management will drive the future growth of CI Financial, according to MacAlpine. The multiples being paid for asset management and wealth management companies have “flipped completely,” he said last year.
For that reason, SBH and other RIAs with long histories of performance and growth have become acquisition targets.
“SBH has built an incredible business and formed a committed team that embodies the characteristics we look for in our acquisitions. SBH has also displayed a proven ability to adapt to changing market dynamics to deliver a consistently superior level of client service and investment performance through deep fundamental research,” MacAlpine said.
Despite the Covid-19 pandemic effectively halting deal activity in the second quarter last year, there were a record 205 deals for RIAs in 2020, according to Echelon Partners, a boutique investment bank that publishes the industry’s most inclusive report on mergers and acquisitions.
Additionally, deals are getting bigger. Last year, the average assets under management transferred in a deal was $1.8 billion, up 24% from 2019’s average of $1.5 billion — the highest ever.
Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.