iA Financial Corporation Inc. announced July 28 that it has entered into a definitive agreement to acquire RF Capital Group Inc. for $597-million. The amount includes a $370-million valuation for RF Capital’s equity (fully diluted) and $227-million in revolving debt and preferred shares.
“By bringing together complementary distribution models, this transaction propels total iA Wealth’s advisory network assets under administration (AUA) to about $175-billion and creates scale advantages in pricing, distribution, digital and brand strength,” Stephan Bourbonnais, Executive Vice-President Wealth Management, said in a statement regarding the $40-billion in AUA that RF Capital brings to the deal.
The company’s advisors, operating under the Richardson Wealth brand of Richardson Financial Group Limited, will continue to operate independently under that brand going forward.
Under the deal, iA will acquire all issued and outstanding common shares for $20 per share in cash. “RF Capital shareholders will receive their consideration entirely in cash, which provides certainty of value and immediate liquidity,” the announcement continues.
Richardson Financial Group Limited, which together with an Alberta numbered company, owns more than 44 per cent of the issued and outstanding shares in play, also put out a statement announcing its support for the deal.
The purchase price, which represents 1.5 per cent of RF Capital’s AUA, will be funded by existing cash on hand at iA. The deal is expected to reduce the company’s solvency ratio by about six percentage points and reduce the company’s capital available for deployment by about $600-million.
“Given $1.4-billion of capital available for deployment at the end of Q1 2025, a recent preferred share issuance and strong organic capital generation, Morningstar DBRS expects the company to comfortably fund the transaction without materially impacting its strong credit fundamentals,” the ratings agency added in a statement following the announcement.
“This acquisition reinforces the trend of Canadian life insurers growing their sizable wealth and asset management businesses as well as owning distribution,” the note from Morningstar DBRS continues. “As these activities often carry minimal insurance risk or other financial guarantees, the risk profile of the industry continues to gradually shift away from product and market risks and toward operational risks.”
The deal, anticipated to close during the fourth quarter of 2025, is expected to be neutral to core earnings in the first year.
