Bain, Abu Dhabi buys 20% of a CI unit

CI Financial Corp., a Canadian asset manager, has sold a 20% stake in its US wealth management unit to a group of investors including Bain Capital and Abu Dhabi Investment Authority. The deal is worth $1 billion and values the business at $5.3 billion. Other members of the investor group include Ares Management Corp. and the state of Wisconsin.

The cash injection will provide immediate financial relief for CI Financial Corp. and enable it to pay down some of its debt. CI’s CEO, Kurt MacAlpine, said that the deal would provide value creation for shareholders, as well as an opportunity to build relationships with long-term investors. The Canadian financial firm had announced plans last year to take the US division public but has now shelved the IPO for the time being.

The deal will reduce CI’s net leverage ratio from four times to 2.7 times, according to the company. CI’s stock market value, including its US business and its profitable Canadian fund management arm, was just C$2.3 billion ($1.7 billion) as of Wednesday’s close. The company has been buying back shares, but executives have expressed frustration at the company’s low valuation as the market has become more concerned about the debt.

“The CI board is thrilled by the outcome of this transaction, which creates substantial value for our shareholders and represents an attractive alternative to an IPO of CI US,” said CI’s Chairman Bill Holland. He added that the company had retained majority ownership of CI US while partnering with world-class investors and adding new directors at CI US.

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