(Bloomberg) -- Canadian mutual fund manager CI Financial Corp. plans to go private in a C$4.7 billion ($3.4 billion) deal backed by Mubadala Capital, one of the largest-ever privatizations by an Abu Dhabi entity in the financial sector.
Shareholders of Toronto-based CI will be offered C$32 a share in cash, a 33% premium to last week’s closing price. The company will stay headquartered in Canada, and insiders will roll some of their shares into the private company, according to a statement Monday.
CI shares surged 30% to C$31.25 as of 9:52 a.m. in Toronto.
Mubadala Capital is an alternative asset manager owned by Mubadala Investment Co., one of several Abu Dhabi-based sovereign wealth funds, which oversee more than $1.5 trillion in assets and have splashed out billions of dollars to extend their influence on the global stage.
Mubadala closed the purchase of Fortress Investment Group earlier this year in a deal that was scrutinized by US officials, Bloomberg News has reported. The CI deal is large enough that it needs approval from the government of Canada, which has sought to beef up its reviews of investments by foreign state-owned businesses.
Despite their vast financial resources, Abu Dhabi-based investors have sometimes struggled to hammer out cross-border deals. Early considerations to buy Standard Chartered Plc and Lazard Ltd. at the start of last year, for instance, proved ultimately unsuccessful.
CI had C$518 billion in client assets as of Sept. 30 and is one of Canada’s largest sellers of retail mutual funds not owned by a large bank or insurance company. Chief Executive Officer Kurt MacAlpine will continue to lead the firm.
“Mubadala Capital invests with a long-term outlook and represents long-term capital – providing stability and certainty for CIʼs clients and employees,” he said in the statement.
Just under half of CI’s client assets are managed by its US wealth management division, Corient. That division consists of a large network of registered investment advisory firms the Canadian company accumulated in an acquisition spree over the last several years.
CI brought on 30 RIAs between late 2019 and 2022. CI nearly tripled its debt over that period to C$4.1 billion, causing S&P Global Ratings to cut the firm to junk in May 2023.
CI then sold a 20% stake in Corient to a group of investors including Bain Capital LP and Abu Dhabi Investment Authority. The proceeds, $1 billion, were used to repay bonds and loans, allowing CI to reduce its leverage. But the deal also received some criticism from analysts for its structure, which included convertible preferred stock that gave the outside investors a guaranteed return.
During the third quarter, Corient completed the purchase of two more RIAs with combined assets of C$8.1 billion. CI previously talked about taking Corient public, and MacAlpine told analysts earlier this month that it could revive those plans in 2026.
Including debt, the Mubadala Capital deal implies a total value for CI of C$12.1 billion. CI Financial will be delisted from the Toronto Stock Exchange following closing of the transaction, but the company will remain a reporting issuer in Canada because of its debentures and notes outstanding.
The deal was approved unanimously by independent CI directors on a board committee. The company’s previously announced dividends will be paid, but future dividends will be suspended.
