IGM Financial Inc. is entering the U.S. wealth management market by buying a large stake in Rockefeller Capital Management.
The wealth management firm, which oversees the management of $258 billion in assets, and is a subsidiary of the Power Corporation of Canada, purchased a 20.5 per cent stake in Rockefeller for approximately US$622 million, a press release on Tuesday stated. This deal makes IGM the second largest shareholder in Rockefeller and increases its access to ultra-high-net-worth clients in the U.S.
"Purchasing an ownership stake in Rockefeller is a risk-smart entry to the U.S. market," James O'Sullivan, president and chief executive officer of IGM Financial, said.
He added that the move is a strategic opportunity that has the potential to drive meaningful earnings growth for IGM over time.
In the past five years, Rockefeller has grown its client assets fivefold from US$18 billion to more than US$100 billion over the last five years, the release said
In addition to this deal, IMG sold off 100 per cent of Investment Planning Counsel to The Canada Life Assurance Company, its sister company, for $575 million.
The sale of IPC was a great move for IGM, one financial expert told BNN Bloomberg in an interview on Tuesday.
“Investors sold IPC for 13 times earnings before interest, taxes, depreciation, and amortization (EBITDA) and it has no growth. IPC hasn’t grown in years and yet they (IGM) just bought a 20 per cent position in Rockefeller also with 13 per cent EBITDA, and that’s been growing about 30 to 40 per cent per year,” David Taylor, corporate director of PI Financial, said.
“It’s nice to be able to sell something that’s not growing, and buy something that’s growing substantially.”
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