By Andrew Welsch
Wealth and asset management company CI Financial has agreed to sell itself to Mubadala Capital, a unit of an Abu Dhabi sovereign wealth fund, in a deal that would take CI Financial private.
Mubadala's all-cash acquisition values CI Financial's equity at approximately 4.7 billion Canadian dollars ($3.36 billion) and implies an enterprise value of approximately C$12.1 billion, the companies said Monday morning.
As part of the deal, Mubadala will buy all outstanding shares of CI, which trade on the Toronto Stock Exchange, for cash consideration equal to C$32 per share. The companies say that represents a 33% premium to the last closing price prior to the announcement of the transaction and a premium of 58% to the 60-day volume-weighted average trading price.
The company will maintain its current structure, management team, and Canadian headquarters, according to CI Financial. It will also remain independent of Mubadala Capital's other portfolio businesses. The acquisition is subject to certain approvals and other closing conditions.
Shares of CI Financial (TSX: CIX) soared 30.15% on the news .
Although CI Financial is a Canadian company based in Toronto, it has a substantial U.S. wealth management unit, and the deal would give Mubadala a significant foothold in the lucrative and enormous U.S. wealth management market. In May, 2023, CI Financial sold a 20% stake in its U.S. advisor division to a consortium of investors that includes the Abu Dhabi Investment Authority and private-equity firm Bain Capital.
Over the past several years, CI Financial went on an acquisition spree, snapping up numerous registered investment advisory firms as it strove to establish a scaled U.S. wealth management unit.
"We are fully aligned with the strategy and direction of the firm and look forward to working with the CI management team to continue to build this outstanding business and ensure that CI continues to deliver superior services to its clients," said Hani Barhoush, managing director and CEO of Mubadala Capital.
CI Financial's acquisitions added substantial debt to the company's balance sheet. The company previously considered spinning off its U.S. wealth unit, Corient, in an IPO, an effort it shelved last year.
"We're excited to continue to execute our U.S. strategy with our incredibly talented team," said Kurt MacAlpine, CEO of CI Financial. "Notably, the transaction preserves Corient's structure and its unique Private Partnership model, under which 250 of our colleagues are equity Partners in Corient. Our partnership model is highly differentiated in our industry -- it allows us to deliver the best of the firm to all clients and creates a culture of collaboration and unified purpose."
CI Financial said its board of directors unanimously recommended that CI shareholders vote in favor of the transaction. "This transaction, with its significant cash premium, represents an exceptional outcome for CI shareholders and provides certainty to shareholders while CI pursues its ongoing transformation," said William E. Butt, CI Financial's lead director. "It also provides significant benefits to Canada, by providing long-term capital to underpin the building of a Canadian champion in the wealth and asset management industries."
Mubadala Capital oversees $24 billion in assets under management and is an independent subsidiary of Mubadala Investment Company, an approximately $302 billion global sovereign investor headquartered in Abu Dhabi. Mubadala has offices in the United Arab Emirates city, plus New York, London, San Francisco, and Rio De Janeiro.
In addition to its U.S. wealth management business, CI Financial also operates asset and wealth management units in Canada. Founded in 1965, CI Financial manages or advises on approximately C$518 billion in client assets. MacAlpine said earlier this month that the company may take its U.S. wealth arm public in 2026 as it gains greater scale.
Write to Andrew Welsch at andrew.welsch@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
November 25, 2024 10:49 ET (15:49 GMT)
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