IA Financial Corp. to buy RF Capital Group for $597M

Quebec City-headquartered iA Financial Corporation will buy Toronto-based RF Capital Group for $597 million, iA announced Monday.

The deal is expected to close in the last quarter of the year, subject to approval from RF Capital’s common shareholders and regulators.

The deal will add 189 advisors and more than $40 billion in assets under administration (AUA) to iA with a focus on the high-net-worth segment, bringing iA Wealth’s network to 2,769 advisors and about $175 billion in AUA.

Adding RF Capital’s Richardson Wealth to iA will complement its two existing brands, Investia and iA Wealth, Stephan Bourbonnais, executive vice-president of wealth management at iA, said in an interview.

With banks owning the lion’s share of the wealth advisory market, Bourbonnais is hoping the deal will help iA become the “number one” independent wealth manager in Canada.

IA wants to keep the Richardson Wealth, Investia and iA Wealth channels distinct, and each brand will have its own president, CEO, chief operating officer and chief financial officer, Bourbonnais said. Keeping the brands unique will help attract independent advisors into the iA network.

“The intention for us is to grow all three channels, to let advisors choose the business model that suits their preference and their needs,” Bourbonnais added. “We want be the destination of choice in Canada when you’re thinking about going independent.”

IA plans to maintain Richardson’s open shelf and approach to the business, Bourbonnais said. There will be no new paperwork for clients.

“The business will feel the same, the platform will remain the same, the office will remain the same, the brand will remain the same, the branch manager relationship will remain the same,” Bourbonnais said. “It’s continuity of the brand, of the business and of the values.”

There will be some vendor consolidation.

IA and Richardson share many of the same vendors, so the acquisition will mean lower costs from the increased operational scale, Bourbonnais said.

In the next three weeks, Bourbonnais and Dave Kelly, president and CEO of Richardson Wealth, will visit most of the branches and meet advisors in person.

The all-cash purchase of $20 per RF Capital share is about 107% of the July 25 closing price of $9.65.

The total $597 million price includes a $370 million valuation for RF Capital’s diluted equity and $227 million in financial obligations. It will be funded from iA’s cash on hand and will reduce iA’s solvency ratio by about six percentage points.

This story has been updated with an interview with Stephan Bourbonnais.