CI acquires California-based RIA with US$5B in assets

CI Financial Corp. has acquired Corient Capital Partners, LLC, a California-based registered investment advisor (RIA) that manages US$5 billion in assets for wealthy clients, the firm said Tuesday as it announced its quarterly earnings.

Founded in 2015, Corient offers holistic wealth management to entrepreneurs, executives, athletes, families and charitable foundations.

CI CEO Kurt MacAlpine said in a release that Corient’s experience serving ultra-high-net-worth clients and its location in the Los Angeles region would contribute to CI Private Wealth’s growth.

Last year, CI Financial established a private partnership acquisition model that offers RIA owners and employees equity in its broader CI Private Wealth business in the U.S.

Darren Henderson, partner at Corient, said in the release that the model “supports the continued enhancement of the services we offer our clients, while as partners, we will participate fully in the development of a new, national private wealth firm.”

The transaction, expected to close in the second quarter, would increase assets in CI’s U.S. wealth management business to approximately $158 billion. Financial terms of the deal were not disclosed.

Responding to an analyst’s question on CI’s fourth-quarter earnings call, MacAlpine said the pipeline for acquisitions is “robust” but “definitely a little bit more moderated than what we saw last year,” when RIA owners “were getting in front of potential tax law changes” in the U.S.

He added that market volatility hasn’t affected CI’s potential deals, and that the firm is “engaged in a series of high-quality conversations.”

“The trends that we’ve seen towards strategic alignment [and] consolidation in the industry I believe are structural, not cyclical,” MacAlpine said.

Earlier this month, CI acquired a minority stake in Newton Crypto Ltd., a Canadian cryptoasset trading platform, while in January, it acquired Toronto-based Northwood Family Office, a multi-family office firm with $2.2 billion in assets under management.

CI reported Q4 net income of $123.7 million, compared to $43.8 million in the third quarter and $104 in Q4 2020. Excluding adjustments, fourth quarter net income was $171 million, up 7.4% from $159.2 million in the third quarter.

For the full year, CI’s net income was $412.4 million in 2021 as compared to $475.5 million in 2020. Adjusted net income increased to $634.8 million from $528.7 million, primarily due to the effect of acquisitions and favorable market conditions, the firm said.

Assets under management on Dec. 31 totalled $152.1 billion, up from $146.6 billion at the end of Q3 and $135.1 billion at the end of 2020.

“In Canada, our wealth management platform posted year-over-year asset growth of 20%, reaching $80.6 billion, while AUM in our asset management segment grew by more than 11% due to strong investment performance and positive net sales,” MacAlpine said in an earnings release.

Integrating the firm’s boutique investment teams into a single global platform and introducing new investment solutions contributed to the turnaround in net sales, he said.

MacAlpine also said CI isn’t getting credit in terms of share price for its shift to the U.S. and its rapid wealth management growth. CI Financial trades on the Toronto Stock Exchange and, since Nov. 2020, on the New York Stock Exchange.

In response to an analyst question regarding the possibility of spinning off its U.S. business, MacAlpine said that “the U.S. marketplace clearly appreciates the business model when you look at the blended multiple we trade at relative to what comparable businesses trade at in the U.S. marketplace.”

He added that the firm would look at all options strategically. “There is a variety of different things that we could pursue, and if we don’t have an ability to get our shareholders the value that exists as one integrated company, we are certainly open to taking different paths to unlock that value,” he said.