(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 receive 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.
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 acquisition 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. It’s also subject to US regulatory approval.
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 at the start of last year, for instance, proved ultimately unsuccessful.
CI shares jumped 30% to C$31.25 as of 11:40 a.m. in Toronto.
The deal marks a major milestone for CI Chief Executive Officer Kurt MacAlpine, who has restructured the Canadian asset manager and built a sizable US business through acquisitions since joining in 2019. The strategy diversified the company’s income streams but increased its debt load, causing S&P Global Ratings to cut the firm’s debt to junk in 2023.
‘Stability and Certainty’
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. 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.
Read More: CI Financial’s US Deal Spree Gets a Cold Shoulder From Investors
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, bought during a deal spree over the last several years. CI brought on 30 RIAs between late 2019 and 2022.
CI then sold a 20% stake in Corient to a group of investors including Bain Capital and Abu Dhabi Investment Authority. The proceeds, $1 billion, were used to reduce debt, 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.
Mubadala Capital plans to fund up to C$750 million of additional cash at closing to reduce the preferred equity outstanding, according to Monday’s statement.
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.
The take-private deal includes a termination fee of C$150 million that CI has to pay Mubadala Capital if the deal falls through under certain conditions, including if the board changes its recommendation. Mubadala Capital, for its part, must pay a reverse termination fee of C$225 million if the deal doesn’t happen in certain circumstances, such as regulators not approving the deal.
INFOR Financial Group Inc. advised CI’s special committee on the deal, while Jefferies Financial Group Inc. advised Mubadala Capital, which was also advised by Bank of Montreal.
