CI Financial signs $4.7B deal to be taken private by Mubadala Capital

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CI Financial shares surged on Monday to close up 30 per cent at $31.22 on the Toronto Stock Exchange.

William Butt, CI’s lead director and chair of the special committee, said the deal represents an exceptional outcome for shareholders and “provides certainty to shareholders while CI pursues its ongoing transformation.”

“It also provides significant benefits to Canada, by providing long-term capital to underpin the building of a Canadian champion in the wealth and asset management industries,” Butt said in a statement.

The deal, however, has some concerned as it’s part of a broader trend of private equity firms buying up Canadian companies.

Rachel Wasserman, a fellow at the Canadian Anti-Monopoly Project, said the widening net of private equity means there’s dwindling access to information on what these once-public companies are doing.

It also makes it harder for average investors to buy into the companies, and raises competition concerns as well.

“When it’s one company, it doesn’t matter, but this is happening at such a scale that it is becoming a real problem,” said Wasserman, who wrote a recently published paper on the rise of private equity.

She said some private equity takeovers have led to the new owners squeeze out value from a firm without growing the business.

Other companies taken private in Canada in recent years include WestJet, Rexall, and Sleep Country Canada as well as funeral homes, dentists and veterinary clinics.

It’s not clear what the implications are in the new ownership of CI Financial, but it’s something Canadians should be aware of, she said.

“Ownership matters -- who owns the company influences everything,” said Wasserman. “We now have the Abu Dhabi government owning Canada’s largest independent financial advisory firm.”

CI said in its release Monday that it expects to continue with its current Canadian operations, structure and management team. It also expects to maintain its Canadian headquarters and remain independent of Mubadala Capital’s other portfolio businesses.

“Mubadala Capital invests with a long-term outlook and represents long-term capital – providing stability and certainty for CIʼs clients and employees,” said CI chief executive Kurt MacAlpine, who is expected to continue to lead the firm.

“With this transaction, CI has never been better positioned to fulfil our mission of delivering outstanding services and solutions to our clients.”

The company said MacAlpine expects to roll all his equity in the transaction and other members of CI’s senior management are also expected to have the opportunity to enter into equity rollover agreements to exchange their CI shares into a new holding vehicle.

The deal is subject to court and regulatory approvals, a shareholder vote and other customary closing conditions. It is expected to close in the second quarter of 2025.

This report by The Canadian Press was first published Nov. 25, 2024.