Corient's Expansion Counters CI Financial's Q3 Asset Declines in Canada

11 Nov, 2023

Corient's Expansion Counters CI Financial's Q3 Asset Declines in Canada

Toronto-based CI Financial unveiled its third-quarter earnings this week, showcasing notable progress with a 31.5% annual asset surge in its rebranded U.S. wealth management entity, Corient. This growth outpaced the company's overall increase, which reached nearly 26%.

During the quarter, Corient and CI's Canadian custody business were the sole segments to witness sequential asset growth. The Canadian custody segment saw an increase due to the conversion of approximately C$14.3 billion in client assets. However, CI's Canadian asset management and wealth businesses experienced reductions over the last two quarters, although they still demonstrated annual growth rates of 4% and 10% respectively.

At the end of the third quarter, Corient accounted for nearly 47% of all CI assets, totaling $197 billion in client assets. It reported an adjusted EBITDA of $99.3 billion, a substantial increase from the previous year's $63.9 billion and the last quarter's $94.2 billion. A significant portion, about 62%, was attributable to shareholders after accounting for non-controlling interest due to a consortium of institutional investors that acquired a 20% share in the U.S. business earlier in the year.

The company strategically utilized a considerable portion of the $1 billion obtained from the sale to reduce mounting debt, primarily incurred during its expansion to form Corient. This debt reduction represents half of CI's 2023 capital allocation, amounting to about $920 million, while approximately 20% ($374 million) is allocated for continued M&A activities. Additionally, around 25% is directed towards stock buy-back programs, with the remaining 5% earmarked for dividend payments.

CEO Kurt MacAlpine highlighted the ongoing adjustments in the company's financial structure, mentioning the pending settlement of obligations stemming from previous acquisitions made until the second quarter. MacAlpine indicated that future acquisitions and liabilities will primarily fall under the U.S. division.

MacAlpine underlined the positive reception of the rebranding and unification efforts in the U.S. market, positioning Corient for sustained growth as one of the largest private wealth firms in the United States. He emphasized the company's commitment to selective acquisitions, aiming to expand its business with high-quality entities and broaden its geographic footprint.

During the quarter, Corient completed a $2.3 billion AUM acquisition in July, contributing an additional $10 million in revenue. Subsequently, it acquired an Indianapolis-based firm holding around $1.4 billion in assets.

CI Financial's overall performance showcased adjusted EBITDA of $276.6 million, a notable increase from the previous year's $25.9 million and the last quarter's $272.3 million. The EBITDA attributable to shareholders amounted to $237.8 million, with adjusted diluted earnings per share reaching $0.81.