CI Financial to buy Sentry Investments for $780M
CI Financial has struck a deal to buy Sentry Investments in the latest wave of consolidation in the asset management industry; but some investors may be disappointed by the takeover, according to Andrew McCreath, BNN’s markets commentator and founder of Forge First Asset Management.
“[CI Financial is] paying 4.1 per cent assets under management at Sentry which I would suggest is a pretty stiff number,” he said Thursday. “They are paying what appears to be a full price for an asset that undoubtedly CI will be able to extract cost savings from – because that is one thing they are great at.”
Under the terms of the deal, CI (CIX.TO) will pay $780 million to acquire Sentry, with $230 million being paid in cash and the balance to be paid in CI shares.
"The combined company will enjoy greater scale, which is key to being competitive in the investment industry today,” said CI CEO Peter Anderson in a press release.
Sentry’s $19.1 billion in assets under management will boost CI’s total asset base to $180 billion.
CI said Sentry will continue to operate as a standalone brand after the deal closes, which is anticipated near the end of September.
Privately-held Sentry is widely considered to have lower EBITDA margins than CI, said McCreath, whose Forge First has been short CI. Also, CI previously indicated it was looking to make large transformative transactions outside of Canada. Last year, it purchased an 80 per cent stake in Australia’s Grant Samuel Funds Management.