Q3 2024 Power Corp of Canada Earnings Call
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Speaker Change: Good morning ladies and gentlemen and welcome to the Power Corporation third quarter 2024 earnings conference call. At this time all lines are in listen-only mode.
Speaker Change: Following the presentation, we will conduct a question and answer session. Analysts who wish to join the question queue may press star then 1 at any point throughout the call.
Speaker Change: If anyone has any difficulties hearing the conference, please press star then zero for operator assistance at any time.
Speaker Change: I would now like to turn the conference over to Mr. Jeffrey Orr, President and Chief Executive Officer of Power Corporation. Please go ahead, sir.
Jeffrey Orr: Thank you, Operator, and welcome to everyone. Thanks for joining us this morning for our results call.
Jeffrey Orr: With me is Jake Lawrence, who is the EVP and CFO of Power Corporation, and we'll walk through the presentation and open it up for questions.
Jeffrey Orr: Just draw your attention to the cautionary statements on pages 2 and 3 regarding forward looking information and non-IFRS information.
Speaker Change: I won't draw your attention to page 4, which is our mug shots, but you can admire those later at your leisure. I'm going to walk right forward to page 7, if we could.
which is overall summary of the quarter.
Speaker Change: Yeah, so listen, I'm really pleased with the performance of the businesses across the portfolio of businesses in the third quarter.
Speaker Change: First of all, Great West Life and IGM which are the...
Producers of Powers
Speaker Change: on-going and repeatable earnings. Each enjoys strong earnings growth, 12% on an earnings per share basis for each of them a year over a year. They also contributed to strong increases in our net asset value.
Speaker Change: and really great developments across the rest of the portfolio, what we sometimes refer to as the NAV.
Speaker Change: part of the portfolio and a number of developments we'll talk about through the presentation including the sale of Peak which is a substantial step in the monetization of our standalone businesses
Speaker Change: Progress at Cigar being recognized with a 39% increase in the value of the of the general partner recognized in the quarter. Well Simple continues to expand its
Speaker Change: client base in a very, very meaningful way in Canada and increase the depth of and the breadth of the relationships it has with its clients. So big increase in the value of our stake in Wealthsimple, and it was offset with a couple of
Speaker Change: reductions in our in our NAV at Lumenpolis and Lyon, but overall strong growth in NAV of 15% across.
Speaker Change: the portfolio and that's continued at least in the public parts which are visible since the quarter end. Continued growth and strong NAV right up through till the month of October and November. So really happy about the quarter, excited to tell you about it.
Speaker Change: I'm going to then turn it over to Jake to walk through some of the financials and the NAV, and I'll pick it up in a few minutes. Jake, over to you. Great. Thanks, Jeff, and good morning, everyone. I'll start on slide 8. As Jeff noted, PowerCorp reflected strong results, and it really came from our main operating businesses, Great West and IGM Financial.
Speaker Change: and there was a few non-cash items which I'm going to detail in a moment. As Jeff reminded everyone, Great West and IGMR are our main earnings contributors and this quarter we're pleased to report the double-digit earnings growth from both businesses.
Speaker Change: Adjusted net earnings from continuing operations was $542 million. That compared to a billion in the same quarter last year. I'll address the breakdown of these results on the following slide, but we'll note that both the current and comparative quarters include one-time items.
Speaker Change: On a per-share basis, adjusted net earnings were $0.84, and that's compared with $1.52 in the same quarter last year. We remained active buying back shares, and the year-over-year reduction in average share count contributed to approximately a two-cent improvement in our earnings per share.
Speaker Change: We've spoken about NAV a little bit. The adjusted NAV was $57.92 per share at the end of the quarter or September 30th. That was up 15% compared to the end of Q2 and it does reflect growth both in our earnings and NAV focused businesses.
Speaker Change: As Jeff just noted a moment ago, the share price momentum in our group companies has continued post-quarter end, since our opcos reported results last week, both Great West and IGM, and our NAV per share as of yesterday's close was up an additional 6% to $61.33.
Speaker Change: Finally, it's worth noting this quarter, the Board of Directors declared a quarterly dividend of $0.5625 per share, and this is in line with what we had declared last quarter.
Speaker Change: Turning to slide 9 to break down the earnings, Great West once again delivered strong-based earnings of over 1 billion dollars with both momentum and growth from each of its four segments.
Speaker Change: I would like to highlight that this marks the sixth consecutive quarter of base earnings increases at Great West, and the 12% year-over-year growth reflects the actions taken by Great West to support and accelerate their strategies to grow both in the U.S. and in Canada.
Speaker Change: IGM Financial reported strong year-over-year earnings growth and power share of its earnings were also up 12% with increased contribution from both wealth and asset management as these two segments each reported record ending average assets.
Speaker Change: at the end of the period. GBL's results, they do have non-recurring items in both the current and the comparative quarter from last year.
Speaker Change: In Q3 2024, GBL's portfolio company Emeris disposed of certain assets and as a result recognized a non-cash loss related to the reclassification of Currency Translation and Earnings, or CTA.
Speaker Change: In last year's comparative period, GBL's contribution also included a significant gain on the decon consolidation of WebHelp following its merger with Concentrix.
Speaker Change: Moving to our alternative investment platform, Power Sustainable's results were comprised of fee-related losses consistent with the prior year, as well as some acquisition costs related to its newest investment strategy, as well as power share of losses on its consolidated energy assets.
Speaker Change: The Guard and Power Sustainable continue to deliver solid fundraising despite some headwinds in the alternative assets space, with year-to-date having raised a combined $1.9 billion in new commitments.
Speaker Change: This quarter, we further refined our presentation by showing standalone businesses as its own line item, while grouping corporate operations and other, which includes charges such as our operating expenses, financing charges, depreciation, income taxes, as well as our dividends on preferred shares.
Speaker Change: We believe this enhanced disclosure will help investors better see through our results.
Speaker Change: In Q3, the contribution from stand-alone businesses primarily included non-cash impairment charges that Jeff referred to, and that was both at LNPG as well as Lyon.
Speaker Change: I'll note that while we expect to generate a gain of almost $200 million U.S. on the sale of Peak, this will only be reflected in our P&L upon closing, which we expect to happen next quarter.
Now turning to slide 10.
Speaker Change: Here we break down the $57.92 of net asset value per share as at the end of the quarter. Our growth in NAV and our growth in NAV per share were headlined by the strong share price performance and our publicly traded operating companies, notably Great West and IGM.
Speaker Change: Our alternative asset investment platforms also contributed to the NAV growth this quarter, as the fair value increases of both WellSimple and Cigarid's asset management business led to a roughly $400 million increase in Power Corporation's net asset value.
Speaker Change: As Jeff mentioned, in addition to the announced sale of Peak this quarter, Peak also previously announced the sale of Rawlings. This generated about $83 million in proceeds, which we did receive during the quarter.
Speaker Change: The proceeds from this sale are reflected in the cash and cash equivalents line, and the combination of this cash, the increase in peaks valuation, and the impairments at LNPG and line, essentially result in a flat contribution from the standalone businesses quarter over quarter.
Speaker Change: Looking a bit closer at the balance sheet, Power's cash and cash equivalents ended slightly lower at $1.4 billion as we remained active in buying back shares this quarter. We transacted over $120 million of repurchases under our NCIB program.
Speaker Change: Of this current $1.4 billion balance, approximately $1 billion is available cash when we consider dividends declared but not yet paid. And I'd also note that this $1 billion does not include the approximate $440 million of proceeds from the sale of Peak that we do expect to receive in Q4.
Jeffrey Orr: They overall were pleased to report NAV growth that was driven by contributions across the portfolio. I'll now turn it back over to Jeff to continue the call.
Okay, Jake. Thanks very much
Jeff: So then I'll just dive in a little more on each of the pieces.
Jeff: And on slide 11, you've got the earnings, the last five quarterly base earnings and net earnings for Great West Life.
Jeff: And I'll just point out, in addition to the 12% year-over-year for the quarter, year-to-date, the base earnings are up 14%.
from 2023 levels.
Jeff: The reinsurance segment, in effect, and also there was some tax noise on the Canadian segment, but all four segments were ahead from last year and continue to show strong growth. Also, importantly, on the return on equity, the company reported ROE on base earnings of 17.3, which is above the high end of its targeted range, and so really strong growth in the efficiency of the capital and the earnings on the capital.
Just a page on page 12.
Jeff: diving a little bit into empower a bit more and this is a reprint of a slide I think that Great West had in there
Jeff: presentation last week, so you may have seen it already, but just pointing out that the Empower Growth story, we continue and Great West Life continues to be very confident in the thesis that we've had and in the strategy that we are engaging in.
Jeff: some questions around the industry around is the DC industry mature and is it in outflows and the answer to that question is the DC market is mature and it's in outflows and that's a core part of our thesis but notwithstanding that we believe we can create and have been creating strong earnings growth through a whole number of
of Factors that we're playing on, which includes...
Jeff: Growth in market share organically, growth in market share through acquisitions, other revenue drivers that are going on in the D.C. market.
Jeff: As well as cost and efficiencies as you get scale all of those are driving profitability in the DC market itself
Jeff: And then the wealth management opportunity that is being driven by the outflows that are coming from that mature DC market are growing even faster, are creating even faster earnings growth in the wealth management segment of Empower. You see that in the bottom right hand. That's certainly been the experience over the past 12 months.
Jeff: and we expect that those trends will continue well into the future. So we remain highly confident in the Empower story and are feeling really good about the performance there.
Jeff: really what Empower is up to. The main acquisitions have been in increasing the DC footprint that they have, the Mass Mutuals and the Prews, but they're also going to continue to look and be active in broadening out these, the breadth of products that they offer to their clients and the option tracks adds a very important capability that we think will increase their competitiveness as they bid for new business.
Jeff: Turning then on page 14 to IGM, I think the overall story at IGM is strong performance by each of the two main core businesses in wealth management and asset management being IG Wealth Management, McKenzie. Great momentum in terms of earnings.
Jeff: I've got great momentum in terms of gross sales, and importantly, the flows are turning in the business, which I'll come back to in a second. And then the rest of the portfolio, the strategic investments, all four of them performing really, really well. So here on page 14, you just see the industry flows. And although IG Wealth
Jeff: and Mackenzie play outside of the mutual fund business. This is just put here as a, there's good data on the mutual fund business. So it's more an indicator of what's happening more broadly in the wealth management market in terms of managed assets.
High-interest rates pinching households
Jeff: and then some money going in outside of managed products into cash products and certificates of deposit.
Jeff: You've got some of that starting to abate and we saw in the fourth quarter or in the third quarter, excuse me.
Jeff: You know, a return to positive flows and that's benefiting IG Wealth, which is getting is back in net flows from both an AUA and an AUM basis, and McKenzie's having improvements but still in a negative flow position, but improvement in their net situation. But the main message on this page is.
Jeff: is that we're starting to see a turn in the industry flows. That would be a great thing, whether, hopefully it continues with the environment going forward, but we saw it was an important milestone for me in the way we look at it.
15 just picks up on my point.
about the strategic
Jeff: investments continuing to deliver. We've got a slide later on, well simple, so I'll just leave that one there, but Rockefeller showing 33% growth in its client assets through a combination of organic growth, new advisors coming on board, and market.
Robert Vasseur, Jake Lawrence, Robert Orr
China AMC
Jeff: 34% year-over-year growth in its assets. It's increased its share in one-year bases to 6.3% from 5%.
of the long-term fund market.
Jeff: Good momentum at China AMC, offset somewhat by some fee declines, so the earnings aren't growing as quickly as that, but the franchise itself
Jeff: in a very strong position. And then Northleaf in a, you know, really a very difficult fundraising environment for alternatives. $1.5 billion of fundraising in the quarter, $4.8 billion overall. AUM has grown 21% compounded since we formed the partnership in late 2020. So great growth at Northleaf.
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Jeff: Just on page 16, a word on the GBL, as you know,
Jeff: All of our companies in the past few years have come out with guidance, have been clear on their objectives, Great West Life, IGM, power itself.
Jeff: Here's what we're trying to do. Here's what our strategies are. Here's our benchmarks and GBL did that last week.
Jeff: with their shareholders going public with their goals and their strategies and gave mid-year guidance, and basically the strategy is summarized in this page. They're continuing to generate cash on the left side of the page, and they expect to use that on the one part for reinvestment, and as they do that, they're shifting the portfolio to more privates.
Jeff: And then the third element is they're also returning cash to shareholders through buybacks and through dividends. So that was articulated with some specific goals as to what they were trying to achieve. And then importantly, if you recall, when we had this call last quarter, we reported that
Jeff: received in 2024 a bump by $80 million to $170 million for next year, and we were unclear as to whether that was going to be a one-time, or whether it was a clear management expected that to be repeated, and they clarified in their presentation last week that they expect that new higher level of dividends, which work out to about €5 per share, is the new base level. Obviously dividends, as you know, are declared by the board. It doesn't mean there'll be a dividend declared next year, but their expectation that they communicate to the market is that new five
Jeff: Dollar Euros is a base level and they look to grow it from there so that was good news and we were pleased to have that in the marketplace. I said I talk about Will Simple and I know I GM covered this.
Jeff: But just continued incredible growth, well simple. They've got 2.6 million clients. They've got multiple touch points with the clients. They've expanded the breadth.
Robert Vasseur, Jake Lawrence, Robert Orr
Jeff: and the mark on Wealthsimple was increased in the quarter by 46% at the IGM level in the way that they account.
Jeff: that does show up in terms of their their mark. We consolidate WellSimple at the power corp level so we don't show the increase in fair value through our P&L and so we but it doesn't show up in the earnings but it's obviously
Jeff: It's a very important mark on the growth and success of the business.
fundraising, hiring new teams and launching new products.
and also M&A and acquiring new firms.
Jeff: So, all the tools and toolkit being used to grow the scale and the success of Cigar. And the GP itself, the manager, the value of that was increased by 39% to about $800 million. We own roughly half of Cigar, as you know. We've got partners in there, Luné, Bank of Montreal, Canada Life, as well as management, so Power Estate is about 50% in the business.
Jeff: Turning to page 19, I think Jake went through most of PEAK, so not too much to add, as I said, I think this is an important step in our continued monetization of the stand-alone businesses. This is a big one.
Jeff: a very, very good return for power, about a three times
Jeff: multiple on the capital invested. We did that with our partner and and so this is just generally a great success story for the group and really nice to see it and looking forward to the cash coming in in the fourth quarter.
Jeff: Okay, then with that I am going to also make a couple of comments on page 20 overall in our... I just jumped forward, yeah, okay, then back to the asset management businesses, just a couple of words overall.
Jeff: on the growth of the businesses. You've got on the left-hand side on page 20 the overall growth of both.
Jeff: Cigar, and Power Sustainable—that's funded AUM, different ways to measure the business. There's fee-bearing AUM, committed AUM, and then there's funded, so that's the funded basis. We talked about the growth and the value of the GP. We also create value through the carried interest.
for the shareholders of our
of our GPs.
Jeff: and again we own roughly 50% of that. Most a lot of that is in cigar but some of that is in the energy infrastructure as you see and we own more of a power sustainable. So our share of that is not a hundred percent but that's a value that's a key value drivers. Growth in the GP, growth in the carried interest and then finally on page 21 the other value drivers we have about two and a half billion dollars of capital that is in the different strategies and overall we are expecting and a return of over 10% in that capital. It's not all going to come every quarter, every year. The fixed income type strategies at the top of the page, the energy, the private credit
Jeff: They tend to be in the real estate, tend to have cash flow attached to them, and obviously the venture capital and the private equity have higher targeted returns, but the returns are episodic.
Jeff: They come as there are monetizations, so they're not steady cash. But overall, we are looking for earnings and value growth through this part of the strategy as well.
All right, page 22.
Yes
Jeff: Our continued quest to return capital to shareholders, Jake mentioned it, you've got $1.4 billion returned over the first three quarters, including dividends and buybacks. And I think, Jake, you did a nice job of going through the cash positions, so I won't go through the second point on the page. And both S&P and DBRS reaffirmed our strong credit ratings over the last several weeks.
Jeff: Page 22 is just a look at our total shareholder returns on a one-year, three-year, and five-year basis compared to a couple of the benchmarks that we follow, and I won't belabor that point.
Jeff: This is just a tracking of our NAV discount, and we're around 23-24% right now, and so we continue to view that as an opportunity for value creation.
Jeff: And we follow it, we don't influence it directly, we influence it indirectly, but the discount, the strong share growth is there notwithstanding that there's still an opportunity on the discount.
And I'm going to finish up on page 25.
Jeff: Just to say we're very optimistic that the tenets of our value creation strategy remain very much in place. The returns that you saw over the last five years, a couple of slides further, or earlier I should say, have really been based on earnings growth.
Jeff: and on NAV growth, they haven't been based upon any material changes in the valuation.
is here
So, the story of the returns we produced are not...
Jeff: because of a re-evaluation of PowerCorp or our subs. It's through earnings growth and NAV growth.
Jeff: and the components of our strategy that we put in place five years ago remain. In fact, they've been validated and we continue growing and have continued to grow in our confidence that we can execute on this strategy and we're looking forward to doing so and looking forward to the future here. So with that, I'm gonna close the comments.
Jeff: and open it up, Operator, to participants on the line who want to ask questions.
Speaker Change: We will now begin the question and answer session. To join the question queue, you may press star, then 1 on your telephone keypad.
You will hear a tone acknowledging your request.
Speaker Change: If you are using a speakerphone, you will need to pick up your handset before pressing any of the keys.
To withdraw your question, please press star then 2.
Speaker Change: And our first question will come from Nick Preeb of CIBC Capital Markets. Please go ahead.
Speaker Change: Just in light of the Wealthsimple markup, I wanted to ask about the ownership dynamics. The power group controls a large economic interest, but there are also third-party LPs that would participate through the Portage Venture Capital platform, and they've done very well in that investment. Do those LPs want to see an exit to crystallize returns?
Speaker Change: or, you know, how mature would that investment be relative to, you know, the targeted hold period for that fund? I'm just wondering how those dynamics might inform or influence the timing of a potential public listing or other exit event.
Thanks.
Nick for your question.
Speaker Change: And it's a good question. Just as a point of clarification, most of the LPs that came into Wealthsimple are not through Portage. The interest of our group is through Portage, but most of those investors came in, I think it was 2021.
Speaker Change: So those are institutional investors, VCs, a who's who list of really tech players and fintech players around the world. And as you can imagine, they've invested into a private company and they will have abilities to have liquidity going down in the future.
Speaker Change: You're asking about timing. I don't have a good view on timing at this point. I don't sit in their seats.
Speaker Change: and I don't have the shareholder's agreement in front of me, but they did come in, I think it was in 2021. The valuation at that point, that was right as FinTech valuations were peaking and they came in at a $5 billion valuation. If you followed the story, you know FinTech values came off quite dramatically in 2022.
Speaker Change: and the positions of power and IGM were marked down and now we've marked them up several times and we're back to the five billion dollar valuation. So one way to think of it is...
Speaker Change: When you think about when would they, I'm now getting into the heads of the investors, which I probably shouldn't do, but I just point out that the value that we just marked it back to is equivalent to the value that they came in at three years ago. So maybe that helps inform how they might be thinking about it.
Speaker Change: But eventually there'll be liquidity discussions in the future and we'll need to deal with them at that time. Not sure I can be more specific and I hope that answered your question.
Speaker Change: So that's actually very helpful. And then just switching to the Asset Manager, I want to touch on a pair of themes in the alt space more broadly. So...
Speaker Change: A number of alts players are talking about the prospect of an improving demand environment for private market capabilities because of this easing denominator effect, better rate stability, better capital return. That would be a benefit to your platform. But a lot of the larger alts players have also been highlighting how LPs want to consolidate the number of GP relationships they have with a narrower focus on large platforms with broad capabilities. I just wanted to get your take on that and what you're hearing in your dialogue with LPs as it relates to those
Speaker Change: That's starting to play out, and it's hoped for, but we'll see how that plays out. I would expect it would be with the enthusiasm in the market and the economy right now, but we'll see how it plays out. On your second point, that is definitely a theme.
Speaker Change: You've got consolidation going on around the major players, so the very large players are well positioned for that. You know, the top five I think are getting something like 50% of the funding. I'm not exactly sure what that period is, but I've seen that figure quoted a number of times. There are hundreds, if not thousands, of Alt players. It doesn't mean they're all disappearing. It does mean that you've got to be, if you're a smaller player, you've got to have a very attractive lineup of funds, and you've got to have good returns.
Speaker Change: and you've got to position yourself with your LPs in a way that you're bringing value added to them and we can walk through ours as to why we think we have differentiated strategies. We do have very good returns.
Speaker Change: We have very good products. We've got differentiated products, but there's no question that there's some consolidation that's happening in the industry as to where funds are going. We're well aware of that. So I'm not sure I can, again, add much more than that. That is for sure a force going on in the market.
Speaker Change: What I'd add on to the second point is, it's part of using cigarette as the example.
Speaker Change: In the past 12 months, roughly, they've wanted to add in capabilities to become more of that one-stop shop, so in addition to their core products, they added in the capabilities of performance equity management around retail funds of funds, some secondaries.
Speaker Change: And they've also added in some capabilities in the collateralized loan obligation space or CLOs with Halsey Point. So that's complementary to existing credit fixed income real estate products and broadens out the product set. At the same time, it brings in from those acquisitions, customers and GPs and allocators they hadn't dealt with before to now cross sell some of the more historical Sugard products into. So we definitely see that theme and we're trying to act on it as well strategically.
Thanks, Jake.
Speaker Change: Okay, thanks for that. I'll pass the line. Yeah, thanks, Nick.
Speaker Change: The next question comes from Graham Riding of TD Securities. Please go ahead.
Speaker Change: Good morning. Maybe we'll stick on the alternatives theme. Just within Cigar, I believe you recently opened up your private credit fund, so it's sort of a retail wealth channel. So maybe just some color on how exactly are you going about that? Are you targeting both Canadian and US?
Speaker Change: channels, and then just, you know, how much of a priority is that broadly for your alternatives platform? What strategies would maybe make sense and how do you go about that process?
Yeah, on your, on the broader question...
The group has been pursuing
Speaker Change: The partnership, in fact, with Northleaf that IGM struck going back to 2020 was all about that.
Speaker Change: and so that's showing up in various ways across our platform and I could talk some more about that but
The alts are finding their way into individual products.
through multi-asset products.
through defined contribution channels, through retail channels, through individual funds.
Speaker Change: And so that is broadly a theme, and it's an important theme, and all the ALTS players are on it. The institutional market and the family office market were the main players in ALTS going back over the last, you know, 15-20 years. They've got quite full allocations.
Speaker Change: The drop at one point, or the decrease in the fixed income market on a lot of those allocators when interest rates went up, in fact found them to be over allocated.
because of a certain fixed income.
Assets were
Speaker Change: Basically, the change in the asset allocation is just through markets, so that exacerbated it. And where the flows are coming in the future are going to be increasingly in retail wealth management channels. So that's a broad theme, and our group has been active across the board, and private credit is simply one example of that. Private credit is finding its way into products. Wealthsimple has got...
Across our channels
Speaker Change: looking for distribution opportunities. And by the way, not uniquely, our distribution channels...
Speaker Change: We'll look to where we have ownership in the asset management.
Speaker Change: space, be it in Cigar, Power Sample Capital, or Northleaf, or our partnership with Franklin Templeton, for example. But also, of course, look more broadly than that. It's not just uniquely products that we're producing. So it's a big topic, very big topic.
Okay, so, you know, I am on your end.
Speaker Change: Yeah, just to sort of maybe summarize a little bit, for Cigard and Northleaf, it sounds like you are looking to leverage your channels through, you know, IG Well, Well Simple and Rockefeller. Is that a channel that has potential to be leveraged as well?
Rockefeller, Empower
There's lots of channels here.
Speaker Change: You know, Great West itself got three, well, across the group would be over three and a half trillion of assets on the platforms, right?
Speaker Change: Lots of distribution and that's not counting when we wholesale onto other people's products, the people's channels
Speaker Change: So, it's across the board, we have our teams working to look for distribution opportunities. And the platforms, the distribution platforms are looking for differentiated product and obviously the asset managers are looking for distribution.
Speaker Change: Okay, great. We don't often talk about GVL, but you did touch on it in your presentation. With the strategic update last week provided by GVL, what are your thoughts? Is this the right strategy to get a shareholder return moving in the right direction for this asset?
So I think
Speaker Change: The answer to that question is yes. GBL has been on a strategy for a few years of returning capital to shareholders, you know, effectively reducing, not abandoning, but reducing their exposure to public markets.
Speaker Change: and going more into private assets where they think they can get greater value creation and recognition.
Speaker Change: And in the meantime, not taking all of the cash you're liquidating, but returning some of that cash to shareholders.
Speaker Change: That's been through buybacks. Given their NEV discount, that's been a smart strategy. We haven't participated, neither we nor the prayer family have participated in that.
Robert Vasseur, Jake Lawrence, Robert Orr
Robert Vasseur, Jake Lawrence, Robert Orr
So...
Oops.
The answer to your question is yes.
Speaker Change: Okay, that's it for me. Thank you. Thank you. Thanks, Graham.
Speaker Change: The next question comes from Jamie Goyne of National Bank Financial. Please go ahead.
Jamie Goyne: Yeah, thanks. I was hoping you could just provide a bit more color on the increase in the SAGAR fair value and the drivers of that.
Yeah, so the...
The drivers of that are increased
Jamie Goyne: There are multiple, increased assets under management, strong performance in the funds.
Speaker Change: If you're still not communicating, please use the Q & A and go to the rest of this webinar. And if you have questions or comments that you'd like to see a life support specialist to add to the original thoughts that we just had about on-site assistance for everyone. So give us two minutes to finish up asking questions. community auspiciousness mobilizing
launch of second funds.
Speaker Change: in each of the strategies. It gets a little technical when you get into trying to value or when one is valuing an alternative asset manager.
when you have a fund that is at first vintage,
Speaker Change: and the space will then drop the discount rate because you've now proven that the product has been successful, your investors have had a good experience, they rolled into a second fund and now you...
Speaker Change: You don't have a first fund, you have a franchise, if I can use the word loosely, in that area. And so an increasing portion of Cigar's funds are on to their second vintage.
Speaker Change: and the discount rates have come down. So you've got a combination of growth in assets, growth in revenue, good performance and more maturity of the strategies in place and lower discount rates and that all turns into a valuation, a higher mark on the valuation.
Speaker Change: So they've added in the more capabilities I referred to earlier, so the last time evaluation was done, the performance equity management and Halsey point interests weren't in there, so that's also increased the value of the entity.
Thanks.
So those are the main drivers, yeah.
Thank you.
Sorry, did you want to add something?
No, I didn't know go ahead Jamie, okay
Jamie Goyne: I was just going to ask about the capital deployment and you know sitting on excess cash of 600 million above your base cash holding levels.
Speaker Change: As you continue to do more buybacks, maybe talk through the dividend as well. It looks like it was on hold this quarter and how you're balancing those two uses of capital.
Speaker Change: Okay, great. Good question. Thank you. So, no change in our approach to share buybacks.
Speaker Change: That's going to remain the priority with our excess cash. As you know, the receipt of cash can be a little sporadic.
Speaker Change: And so we don't necessarily get a bunch of cash in and go and kind of spend it all in one quarter. We try and be a little more systematic about it than that so that we can be in the market on a more continual basis.
Speaker Change: from our three principal public companies. So the way we think of our dividends that we pay out, we pay out dividends from what we consider to be consistent sources of inflows.
Not from the inconsistent
Speaker Change: sources of inflows like we monetize peak or we have a realization on one of our private equity positions.
Speaker Change: So, the way to think about that is we take our Great West Life dividends, our IGM dividends,
Speaker Change: And our GBL dividends, we deduct our operating costs and financing costs, and that's a flow-through of those dividends.
Thank you.
Speaker Change: The last time that we we haven't had a dividend increase that's come through in cash
Speaker Change: The last time that was when the Great West increased its dividend that they announced back in February.
Speaker Change: And so that was an increase in the dividends received and that resulted in this, when they announced that February and March, we announced an increase in our dividends, flowing that anticipating receipt and flowing it through. And I don't see any change in that, so that's a long way of saying, you know, we've got, our dividends will increase when we receive higher dividends from those three subs.
Speaker Change: Hope that's clear. I don't know if that answers your question.
Yep, that's perfect. Thank you.
Okay, thank you.
Operator, I don't see any other names on the
on the question list at this point.
Speaker Change: Yes, we have no further questions at this time, so I'll turn the conference back over to Mr. Jeffrey Orr for any closing remarks.
Jeffrey Orr: Okay, thank you. So again, thank you. Really excited about the quarter and lots of momentum building in the businesses. And with that, I'm gonna thank everybody for participating in the call. We'll look forward to speaking to many of you in the weeks and months ahead. Thanks everyone.
Speaker Change: Ladies and gentlemen, this concludes your conference call for today. Thank you for participating, and you may now disconnect your lines.