February 21, 2024



CI Financial, a large Canadian asset manager, said Thursday it is selling its minority stake in Boston-based Congress Wealth Management to a large private equity firm.

Toronto-based CI entered into an agreement to sell its stake to Audax Private Equity. The Canadian company bought the stake less than three years ago, but its expansion strategy has shifted to focus on outright acquisitions of consultancies.

One of the most aggressive buyers of registered investment advisors In the US, CI has acquired more than 20 independent companies since entering the market in early 2020.Its U.S. headquarters are in Miami; the firm manages more than $391 billion in client assets, including U.S. wealth management assets $187.5 billion By the end of March, it had increased by 28.6% compared with the same period last year.

Last April, CI said it would sell up to 20% of its U.S. wealth management business through an initial public offering In the U.S. at the time, CI stable RIAs were largest part of the company Including approximately $133 billion in assets.company filing form It went public in December, but the move has stalled due to a lackluster IPO and market volatility.

CI Chief Executive Kurt MacAlpine said in a statement Thursday that the sale of the Congress stake was due to a change in CI’s partnership model, CI Private Wealth.

“To fully benefit from its capabilities, only active business contributors should become CIPW partners,” he said. “Unfortunately, the ownership structure in Congress prevents it from being fully integrated into CIPW. CI and Congress believe that minority ownership is not the best structure for maximizing the customer and employee experience,” MacAlpine said, adding that Boston-based Audax “will be a supportive An excellent partner for Congress’s next chapter of growth.”

CI received an undisclosed amount triple its initial investment in Congress and will use the proceeds of the sale to pay down debt, the statement said. As of Dec. 31, 2022, the company had more than $4.2 billion in total debt, which is money it has borrowed to fuel acquisitions.its stock is 53% drop in past 5 yearsincluding nearly 5% this year.

Congress Wealth President Paul Lonergan said in the statement, “The investment from CI has been very productive and we are exiting on the best possible terms.” He added: “In addition to finding a solution that fits our ownership, we are eager Seeking more M&A opportunities with the support of

When CI acquired a majority stake in Congress, the firm managed $2.3 billion in client assets.As of the end of December last year, Congress oversaw $5.1 billion. In 2021, CI Helps Congress Buy Pinnacle Advisory Groupthen a $2.4 billion consulting firm based in Columbia, Maryland.

Dan Seivert, CEO of Echelon Partners, a boutique investment bank focused on mergers and acquisitions and succession planning in the wealth and investment management industry, said the CI sale doesn’t mean the firm is stopping its aggressive push into the U.S. wealth management market.

“Absolutely not,” he said, adding that Capitol was one of CI’s first minority investments, but that CI had moved to a different model of buying the consulting firm outright.

“They changed the structure of how they do deals, but their strategy remains the same — to grow the wealth management business in the U.S.,” he said. “It won’t be the last of them to escape.”