CI Financial considers U.S. listing

Fund manager is buying up smaller firms

CI Financial Corp., Canada’s largest independent mutual fund manager by market value, may seek a U.S. listing as it ramps up a strategy of buying smaller wealth management firms.

Chief executive Kurt Macalpine said the Toronto-based company is in talks with a number of U.S. registered investment advisers, having bought interests in eight firms over the past year. CI’S largest such deal came in August, when it agreed to buy Balasa Dinverno Foltz LLC of Itasca, Ill., a private wealth management firm with US$4.5 billion in assets under management.

“We’ve been focused on globalizing the company in a number of different ways. One is our business mix. The other is our investor base,” Macalpine said. “There absolutely is a scenario where we do our next financing in the U.S. It would probably be a little bit easier to do it on the back of having a listing in the U.S., just because it helps to reinforce interest in our stock.”

CI’S new strategy is to expand beyond its Canadian base by consolidating U.S. firms that handle investments and offer advice to affluent clients. It’s looking to boost profits from its wealth management segment, which employs investment advisers, to at least $200 million in the long run, the CEO said, helping offset headwinds in its core mutual fund business.

CI has seen its stock price fall 40 per cent over the past five years as the fund industry faces growing pressure on fees and tougher competition in Canada from domestic banks and global ETF providers.

At $4 billion in stock market value, CI is larger than other Canadian independent firms such as AGF Management Ltd. and Fiera Capital Corp. — but it’s smaller by assets under management than some bank-owned rivals, including Royal Bank of Canada’s global asset management arm.

Macalpine, 39, has set out a game plan to propel the company in a new direction since taking the helm a year ago.

International expansion is central to that.

That means a lot of small deals. In addition to BDF in Illinois, CI has bought interests in advisory firms in California, Massachusetts, Arizona and Arkansas.