CI Financial Sells Stake in U.S. Wealth Unit

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, according to data compiled by Bloomberg.

It has been buying back shares, but executives have expressed frustration at the company’s 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. “We have retained majority ownership of CI US while partnering with world-class investors and adding new directors at CI US.”

Bloomberg Intelligence’s View

CI’s agreement to sell 20% of its US Wealth business to a group of institutional investors can establish a strong value to its remaining stake, we believe. The deal prices the US Wealth unit alone at C$6.7 billion, about 3x CI’s overall market cap or 25.6x adjusted Ebitda, consistent with the top end of similar deals.

— Ethan Kaye, Bloomberg Intelligence analyst

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