Independent wealth manager Wellington-Altus Financial Inc. is seeking a new private equity partner to buy as much as 30 per cent of the company as it looks to hit $50-billion in client assets by 2026.
The Winnipeg-based firm announced Friday that it is launching a search for a new partner that will acquire approximately 20 to 30 per cent of its existing equity. Such a transaction would allow the investment dealer’s existing shareholders and financial advisers to sell some of their shares without impeding the company’s growth plans.
Unlike previous equity rounds, this transaction is a secondary share sale, allowing shareholders to liquidate some of their holdings in the company, and will not add equity to the firm’s balance sheet.
“We want to recognize some of our advisers who have been with us for a long time and who trusted us early,” Wellington-Altus chief executive officer Shaun Hauser said in an interview. ” And secondly, it validates our enterprise valuation.”
The firm manages more than $35-billion in assets, and Mr. Hauser said its next medium-term target is to reach $50-billion by 2026. The long-term goal is to reach $100-billion.
Adding a new private equity partner will help boost that future growth, he said.
This is the fourth round of equity financing the company has sought to complete. The first three included primary private equity capital.
In 2021, the Cynosure Group and Jessiman Family Investments Inc. put a combined $85-million into Wellington-Altus and received board seats.
Two years later, Cynosure injected another $40-million in a second-round growth equity investment, increasing its minority stake in the company to 15 per cent.
And, earlier this year, Wellington-Altus secured a new credit facility from private credit funds managed by Los Angeles–based Ares Management Corp.
Mr. Hauser said the company has not yet tapped into the credit facility, but added: “Stay tuned.”
He declined to comment on any financial details of the facility other than to say it is “long-term in nature.”
Following the proposed transaction, the company will remain majority-owned by its advisers and employees.
“In today’s world, with how big the private equity sponsors are in a global sense and the experience that they have as registered investment adviser investors, we are looking at adding a potential partner that’s going to bring a wealth of experience across many different mediums,” Mr. Hauser said.
Co-founded in 2017 by Mr. Hauser and chair Charlie Spiring, Wellington-Altus has been aggressively recruiting financial adviser teams across Canada. Today, the company has grown to about 110 adviser teams and 900 employees.
After the first injection of $85-million in 2021, the company used about half the funds to entice high-end advisers – those who typically manage clients with more than $1-million in investable assets – away from competitors. The firm added about $5-billion in new assets in 2023 and is on track to add another $5-billion by the end of 2024.
Mr. Hauser said he has spent a lot of time in the U.S over the past five years studying the wealth management model and meeting private equity companies.
“We’ve had a lot of folks call us the last two years,” he said. “And we think we have a real good handle on the private equity sponsors down there. Now, we would be looking to finding a new partner through a formalized process.”
However, he isn’t limiting himself to just U.S. private equity firms. Last week CI Financial Corp. sold itself to the alternative asset management arm of a Middle Eastern sovereign wealth fund for $4.7-billion.
“There’s a lot of smart money that resides around this globe, and we would be foolish to limit it to one country to find a partner,” he said.
Unlike some of his competitors who took on debt to grow, Mr. Hauser says his company has zero debt on the balance sheet.
“I think that’s from a combination of playing the long game and financing our business early through private equity and fiscal responsibility,” he said. “So if you’re looking from a balance sheet test perspective on our business and how we’ve grown this amount of assets up until now, I think it has been done very wisely.”
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