A subsidiary of the Montreal financial conglomerate Power Corporation is making a breakthrough in an attractive and coveted market segment, that of services to the rich and ultra-rich in the United States.
By announcing this week the acquisition of a 20.5% stake at a cost of 840 million in the independent American financial advisory firm Rockefeller Capital Management, IGM Financial is making its second largest strategic investment (the largest remains the one in Asian asset manager China AMC which doubled to 28% in January).
Growth is the obvious thing when you take a look at Rockefeller Capital Management. This firm offers a range of services to clients such as the Rockefeller family, but also to institutional investors, in addition to advising large entrepreneurs qualified as “visionaries” and “innovators” and managing their assets.
In five years, the number of offices of the firm has increased from 3 to 44 in the United States. These numbers help in part to understand why Rockefeller Capital Management gets a C$4 billion valuation.
Rockefeller, whose iconic brand and business model is focused on high and ultra-high value customer segments, targets locations with significant concentrations of wealth, such as New York, Dallas, Boca Raton, Palm Beach, Boston, Atlanta, Charlotte, Chicago, Denver, Los Angeles, Nashville, San Francisco, etc.
It was not possible to speak to an IGM boss on Wednesday, but management told La Presse that while the “regular” customer segment remains important to the company, it is increasingly trying to attract and serve high net worth clients.
“We view this customer category as an excellent opportunity as this investor market is growing faster than any other retail market segment,” it said by email.
“The needs of high net worth individuals and families tend to become more complex as their wealth grows, which makes this class of clients attractive to us, due to our approach to holistic financial planning,” it added.
Inflows of funds managed by IG Wealth Management from new clients with investments over $500,000 have increased by 59% since 2019, we are told.
This transaction is therefore part of a strategy aimed at developing a very wealthy clientele, but also at penetrating “without taking undue risk” the American market, the “largest in the world”.
The investment notably brings IGM two seats on the Rockefeller board of directors and the possibility of eventually increasing the stake in Rockefeller.
Majority shareholder of Power Corporation, the Desmarais family has for decades maintained ties with the Rockefeller family, one of the wealthiest in the United States. Rockefeller Capital Management has, among other things, provided advice to Power Corporation over the years on corporate acquisitions.
Sustaining the growth trajectory shown in recent years will be key to ensuring long-term value creation for IGM shareholders, TD analyst Graham Ryding said in a note sent to clients on Wednesday.
Rockefeller Capital Management thus becomes another strategic investment for IGM. Along with a stake in China Asset Management, IGM also has strategic investments in investment firm Northleaf, robo-advisor Wealthsimple, and a 2.4% stake in financial services holding company Great-West.
To help fund its investment in Rockefeller Capital Management, IGM sold Investment Planning Counsel for $575 million to its sister company, Canada Life Insurance Company, which is also part of the Power Corporation conglomerate through Great Britain. West.
