Kurt MacAlpine, CEO of CI Financial, sits in the company's office in downtown Toronto on Dec. 20, 2019. Tijana Martin/The Globe and Mail CI Financial Corp. CIX-T is holding talks with private equity firms about a new investment in the Canadian asset manager, with the potential for a full-blown privatization, according to three sources. U.S. private equity firms have been circling CI as it amasses assets in its U.S. wealth management business, Corient Holdings. The U.S. arm has spent the past four years acquiring registered investment advisor companies, known as RIAs, and lately, private equity firms have paid hefty prices to buy up RIA-aggregators. Recently, CI has held exclusive talks with a group of private equity buyers from the United States, one of the sources said. The Globe and Mail is not identifying the sources because they are not authorized to speak publicly about the deal. CI did not respond to multiple requests for comment from The Globe on Sunday. The talks are still continuing and there is no certainty a deal will be announced, but CI founder and chair Bill Holland has mused in private about public investors not appreciating the worth of the entire company. One source said Mr. Holland has suggested CI should be valued at $10-billion, even though its current market value on the Toronto Stock Exchange is $3.5-billion. The idea of privatizing one of Canada’s oldest money managers is not entirely new – nor is CI taking an investment from private equity backers. In April, 2022, CI chief executive officer Kurt MacAlpine, who had been recruited to run the company in 2019, told analysts that he wanted to divide it into two businesses and file for a stock offering for CI’s U.S. wealth-management arm later that year. He also said he would eventually privatize the Canadian operations through share buybacks. Those plans were derailed because the U.S. stock market kept dropping in value throughout 2022. With an IPO on hold, shareholders, analysts and debt-ratings agencies expressed concerns about the amount of debt CI took on to fund its U.S acquisition strategy. From the end of 2019 to the end of 2022, CI’s net debt – its obligations, offset by its cash on hand – rose to $4.2-billion from $1.4-billion, according to S&P Global Market Intelligence. To begin paying down the debt, the company sold a 20-per-cent stake in its U.S. wealth management business in 2023 to a group of institutional investors for $1.34-billion and told investors it was pausing plans to go public. The investors included Bain Capital, Flexpoint Ford, Ares Management, the State of Wisconsin, and a wholly owned subsidiary of the Abu Dhabi Investment Authority, among others. While stock markets are hot again, the IPO market remains muted and Mr. MacAlpine told analysts earlier this month that any IPO would “probably be sometime in early to mid-2026.” As CI Financial tops $500-billion in assets, investors’ worries ease Given these constraints, private equity options have more merit – especially because these firms have been paying premium valuations for U.S. “RIA consolidators” or those companies that have already acquired a number of smaller RIA firms. In September, Creative Planning – an RIA consolidator based in Overland Park, Kan., with US$375-billion in assets under management – sold a minority stake in its wealth management business to private equity giant TPG Capital. While details of the transaction were not disclosed, CityWire, an industry publication, reported it was about a $2-billion stake that valued Creative Planning at more than $15-billion, or 23 times its earnings before interest, taxes, depreciation and amortization (EBITDA). CI’s U.S EBITDA can be tough to calculate because there are a lot of expenses tied to its continuing acquisitions, but after stripping those out last quarter, the U.S. arm reported roughly $100-million in adjusted EBITDA. If CI sold a stake in its business at 23 times that annualized figure, the division could be valued at $9.2-billion. During an analyst call on Nov. 14, Mr. MacAlpine was asked how Corient, the U.S. arm, compares in terms of margin profile, client mix and geographic reach to Creative Planning. While he said he’d rather not compare the two companies, he said he was “confident” that Corient was the “fastest-growing kind of wealth platform by far,” with very attractive operating margins and growth. In total, CI has more than $518-billion in assets, and nearly half of its assets – $251-billion – are held in Corient, as of Sept. 30. That is up from $197-billion a year prior. Most recently, Corient added another $10-billion in assets with the purchase of San-Francisco-based Ensemble Capital, Florida-based Emerald Multi-Family Office, and North Carolina-based Byron Financial LLC. Those are in addition to two other RIA acquisitions CI completed in May, which added $5.6-billion in assets. CI’s share price has been steadily climbing in recent months – closing at $24.01 on Friday, a 61-per-cent increase year-to-date. Mr. Holland, the chair, is the company’s largest shareholder, owning 8.2 per cent of the company. According to securities filings, Mr. Holland has spent $71.8-million since March, 2020, buying 4,176,500 CI shares in a series of purchases, mostly on the open market. Earlier this year, CI managed to bring its long-term debt down to $3.1-billion, easing some worries from investors. However, S&P and some other analysts consider CI’s 2023 sale of $1.3-billion of preferred stock as debt, not equity. 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