On Monday, iA announced it has agreed to purchase RF Capital, a financial advisory business that operates under the Richardson Wealth brand and is partly owned by Winnipeg’s Richardson family, for $20 a shareAdrien Veczan/The Canadian Press
Financial services giant iA Financial Corporation Inc. (IAG-T) has scooped up one of Canada’s largest independent wealth managers, RF Capital Group Inc. (RCG-T), in an all-cash $597-million deal, adding about 189 investment advisers and $40.3-billion in assets under administration.
On Monday, Quebec-based iA Financial announced it has agreed to purchase RF Capital – an advisory firm known as Richardson Wealth, which is partly owned by Winnipeg’s prominent Richardson family – for $20 a share, valuing the company at a 107-per-cent premium over Friday’s closing price of $9.65.
The acquisition, which still needs regulatory and shareholder approval, includes a $370-million equity valuation and $227-million in financial obligations for debt and preferred shares.
Consolidation has been rampant among Canada’s wealth management industry as the country’s Big Five banks look to expand their own wealth management divisions. Last month, Bank of Montreal acquired employee-owned Burgundy Asset Management Ltd. for $625-million.
However, Richardson Wealth chief executive Dave Kelly said in an interview that while there was no “financial need” to sell the company, the Richardson family was clear that any acquirer would need to be “independent, and Canadian-owned.”
“The industry is really changing,” Mr. Kelly said. “And for the Richardson family, I think the opportunity to partner with somebody like iA came at the right time to be able to take the next leg of the journey for a company that they built and that they’re very proud of.”
Mr. Kelly said the company was never put up for sale. Rather the decision came about after several conversations with Stephan Bourbonnais, iA Financial’s executive vice-president of wealth management. (Richardson did receive a second bid from another party but Mr. Kelly declined to comment on who the party was.)
Mr. Kelly said that over time, both iA and Richardson Wealth increasingly saw the benefits of a deal.
“Today, advisers need more investment in digital tools,” Mr. Kelly said, as well as access to greater support in technology, product innovation and operations.
For iA, the deal boosts its presence in the high-net-worth advice business. Upon closing, iA Wealth – the division that oversees two other investment dealers – will have more than 2,750 advisers managing about $175-billion in assets .
Mr. Kelly said he will remain with the company until June, 2026. At that time, iA will announce a new chief executive officer for Richardson Wealth.
The Richardson Wealth name will be retained by iA for 30 months. Following that period, it will be renamed but remain independent.
iA Financial Group President and CEO Denis Ricard in Toronto in February, 2025.Sammy Kogan/The Globe and Mail
Earlier this year, iA Financial chief executive Denis Ricard told shareholders he was on the hunt for more acquisitions with $1.4-billion of capital at the ready. In particular, he wanted to boost iA’s U.S. insurance operations as well as to recruit independent advisers to its Canadian wealth-management arm.
Richardson Wealth is one of Canada’s largest independent wealth managers. In 2020, it went through a tumultuous restructuring that began when parent company GMP Capital – which was renamed RF Capital Group Inc. – sold off its capital markets division in 2019 to become solely a wealth management company.
To do so, RF Capital had to purchase the 67-per-cent stake of its own wealth management arm – Richardson GMP – that it did not already own, giving it full ownership of the operation. In October, 2020, a majority of Richardson GMP shareholders voted in favour of the acquisition.
Part of the draw to join Richardson is its ownership model, which allows advisers to become direct equity owners in the brokerage. All adviser shares will be paid out fully, upon close of the iA deal.
However, since the restructuring, RF Capital has seen its share price struggle, dropping from $13.20 in July, 2020, to $5.00 in 2023. It saw a slight recovery when shares climbed up to $9.65, as of July 25.
Sandy Riley, president and chief executive of Richardson Financial Group Ltd. – who owns about 44 per cent of Richardson Wealth – said in a statement the board’s decision to accept iA’s offer was the “best path forward to unlocking value for all stakeholders.”
It is not the first time the Richardson family, which is largely known for its lucrative grain operations in Western Canada, has exited the financial services sector.
In 1996, the Richardsons sold investment dealer Richardson Greenshields to Royal Bank of Canada. In 2003, the Richardson family returned to financial services with the launch of Richardson Financial Group.
Since then, financial advisers at Richardson Wealth have experienced several major overhauls, including a merger with rival GMP Private Client, the buyout of Australian powerhouse Macquarie Private Wealth and a three-year corporate restructuring process that sold off its capital markets division.
In 2016, Richardson was in discussions to be acquired by TD Bank, with advisers looking to cash out their employee shares at an attractive margin. But the deal fell through at the last minute.
At the same time, iA Financial has spent the last decade rapidly growing as a serial consolidator in both insurance and wealth management. Today, the company manages more than $264-billion in assets throughout two dozen subsidiaries in financial services. That is up from $173-billion in 2018.
Adviser retention will be critical before iA can declare the acquisition a success. Typically, retention bonuses are paid out to advisers by an acquirer. They are set up as forgivable loans and can lock advisers into a contract for three to seven years. However, these bonuses usually require any adviser who wants to leave before their contract is up to repay the outstanding loan amount back to the company.
Mr. Bourbonnais declined to comment how much will be allotted for retention bonuses but said along with Mr. Kelly, he is already meeting face to face with advisers.
During an analyst call on Monday, Mr. Ricard commended Mr. Bourbonnais on the success of retaining 100 per cent of advisers during the company’s recent acquisition of Laurentian Bank’s retail brokerage.