The stake was acquired before CI Private Wealth was established and is not congruent with its partnership model
An investment made by CI Financial Corp. in an American wealth manager has proved to be a canny one, providing a strong ROI as the firm divests.
The Toronto-based firm acquired a minority stake in US firm Congress Wealth Management in the third quarter of 2020 through its US subsidiary CI Private Wealth, LLC (CIPW).
It is now selling its stake to Audax Private Equity for approximately three times its initial investment and will use the proceeds to pay down debt.
Kurt MacAlpine, CI’s chief executive officer, said the relationship with Boston-based Congress has been good but the investment predates CIPW’s differentiated private partnership model.
“To fully benefit from its features, only active contributors to the business can be CIPW Partners,” he explained. “Unfortunately, the ownership structure at Congress precludes it from fully integrating into CIPW. CI and Congress believe that minority ownership is not the best structure to maximize the client and employee experience, and that Audax will be an excellent partner to support the next chapter of growth for Congress.”
The transaction is expected to close in May 2023.
Not all plain sailing
CI Financial’s foray into the US wealth management market has been ambitious but not always easy.
Late last year, MacAlpine told Wealth Professional that despite investor concern about debt and the growth strategy, his plan to modernize and expand the firm is the right one.
“We initiated the strategy to grow our U.S. business in early 2020. Fast forward to today, and we have the largest integrated RIA or wealth management business in the U.S., north of US$126 billion in U.S. assets and still growing,” he said. “It’s been a journey, but I’m happy with the progress we’ve made.”
Since he announced the expansion ambitions, MacApline has overseen an impressive list of acquisitions, even as the world grappled with the headwinds and uncertainty of the global pandemic.
MacAlpine told Wealth Professional in January 2021 that he was responding the fast pace of change in the wealth management industry and in fact wanted to be setting the pace.
“The rate and pace of change taking place in our industry, whether it's the asset management industry, or the wealth management industry, and whether it's Canada or other markets, has hit an all-time high,” he said. “The velocity of change continues to increase and we wanted to make sure we were taking advantage of our great starting point [in Canada] to position ourselves at the forefront of that change.”
