Canadian asset manager CI Financial Corp. is selling a 20% stake in its U.S. wealth management unit to a group of investors including Bain Capital LP and Abu Dhabi Investment Authority. The shares soared.
The $1 billion cash injection gives the business an enterprise value of about $5.3 billion, CI said in a statement that also named Ares Management Corp. and the state of Wisconsin as members of the investor group. The deal was reported first by the Wall Street Journal.
CI rose 44% to C$18.05, the highest in more than a year, as of 9:42 a.m. in Toronto.
For CI, the transaction means immediate financial relief, allowing it to pay down some of the debt it accumulated when it acquired dozens of wealth management offices across the U.S. as part of a new growth strategy by Chief Executive Officer Kurt MacAlpine.
CI also announced an offer to purchase its bonds due in 2024, 2025 and 2027.
The Canadian financial firm announced plans last year to take the U.S. division public, and still intends to do so in the future, MacAlpine told analysts.
"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," he said in the statement.
