Good morning, ladies and gentlemen, and welcome to the Power Corporation Q1 2023 Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for a question. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time. I would like to remind everyone that this call is being recorded on Tuesday, May 16th, 2023. 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.
Thank you, operator, welcome everyone. Thanks for joining us this morning for our first quarter results call. I would draw your attention on page two to the cautionary statement regarding forward-looking statements and Non-IFRS disclosure measures. With me this morning is Greg Tretiak, who's the Chief Financial Officer of Power Corporation. Together we'll make the presentation and then be pleased to answer your questions. I will just highlight page six, as I normally do, to call your attention to various public disclosure events and documents for our group companies that you can reference that have come out over the last several weeks. With that, I will turn to page seven. First comment on our earnings, and really we focus our earnings on Great-West Life Co.
IGM, which are the two main sources. They are the sources of our recurring earnings. It was a strong result in what is pretty difficult market conditions. Great-West Life, of course, the big highlight, is that they and their other competitors in the insurance industry released earnings under IFRS 17, so a very significant change. Greg will spend just a quick few moments on that today, although the Great-West Life disclosure is much more extensive on the topic, obviously. Great-West Life had, you know, strong earnings in the quarter. IGM, at CAD 207 of adjusted net earnings just down a snick from the same quarter in 2022, despite, you know, significantly lower markets, we thought was a very strong result.
Their net earnings, of course, were affected by the transaction that we did with ChinaAMC and the gain they recognized with respect to that. We ourselves look at the adjusted net earnings number as the one which is more indicative of underlying earnings levels. You know, a lot of things happened in the quarter. We've been awfully busy. Great-West Life announced the acquisition of IPC from IGM. We'll give our perspectives on that in this call. IGM announced the acquisition of a 20% plus interest in Rockefeller. Make some comments about that.
GBL reported good growth in its net asset value and really quite an interesting transaction on Webhelp, which we will talk about not just in terms of the value that was created, but I think it's quite illustrative of some of the earnings challenges that exist in looking at that part of our portfolio from an earnings point of view, as opposed to from a value creation point of view. The platforms in a difficult environment raised just under CAD 400 million during the quarter. We'll touch on those points as we go through the presentation. Page eight is just a reminder it's a difficult environment. The bottom left hand, the S&P had its worst year since the financial crisis, its fourth worst on record.
That coincided with the Bloomberg Barclays Bond Index having its worst performance on record. This was a difficult year for investors and for companies that serve investors and earn a lot of their revenue from market levels. That, of course, on the right-hand side, has resulted in investors not putting a lot of work, money at work, excuse me, in markets. Money is flowing into CDs and other type products as you've seen, and this is a Canadian example, but it's true across the various geographies where we operate. Greg, I'd ask you to pick it up on the earnings and the NAV over the next few slides.
Okay. Thanks, Jeff. So I'm on page 9 and looking at adjusted earnings, CAD 514 million in the quarter, which is up 16% over last year, CAD 0.77 per share, which is 18.5% over last year. The NAV, nice increases over the quarter. We have more on that in subsequent slides, so I won't spend any time there. Of course, we declared a quarterly dividend of CAD 0.525. Take you over to page 10. I'm not gonna give you an accounting class today. I'm sure you've heard a lot about IFRS 9 and 17 for all those who follow the insurance industry. Just a few points if we could.
You know, with Great-West Lifeco, they adopted 17 and 9, and that affects about a third of their business, and a lot of work for that reporting effort in the quarter, obviously. One of the things that is apparent, I think, across the industry is that, you know, the net earnings volatility, given the de-linking of assets and liability under the standards, standard 17 in particular, is expected to continue to give net earnings volatility. I'm sure you've seen that and you can witness it in the quarter's, certainly in Lifeco's results and others.
At Great-West Life, I think one of the most important changes in terms of management's presentation has been the addition of the value drivers, workplace solutions, wealth, and asset management and insurance and risk solutions. I think, you know, breaking down the information in this way and presenting the information this way will give us a lot more insights and new insights into the nature of the business and how it's performing in addition to their geographic segmentation. With respect to Power Corp, I should start with GBL. GBL adopted IFRS 9 back in 2018 when you first adopt that standard.
At that time, PCC preferred to wait until Great-West Life, it's one of its major subs, obviously, to change its accounting. We were under 39 and we moved to nine. In that reconciliation, if you will, pre-presented a fair amount of noise in our results over the last several years. We adopted GBL's accounting standard, which is IFRS 9 in this quarter. Going forward, that's one less moving part that you'll see in our numbers, which is a good thing. On Power Sustainable China, we have this portfolio basically is held for capital appreciation. We look to obviously the changes in NAVs over time for this particular portfolio.
We have classified it as fair value through OCI. All the rest of our investments are basically fair value through the P&L. There was a slide in the appendix that helps you navigate our selection of accounting standards through the quarter. Sorry for the long-winded explanation of the changes for accounting in the quarter, but I promise not to do it in the future.
Check with the operator whether we still have anybody on the line, Greg. Sorry.
The page 11. Adjusted net earnings. You can see that Great-West Lifeco and IGM combined delivered CAD 663 million versus the CAD 600 million in Q1 of last year, up 11%. Good showing. Jeff's already spoken to the strength of both Great-West Lifeco and IGM's results in the quarter. Looking at GBL, you can see that it was up over last year. There is a slide in there, or I should say a section in the MD&A, page 39, which I think breaks out nicely their earnings. You'll see the cash dividends were up in the quarter, and that's one of the things that we keep an eye on when we're looking at their earnings.
Sagard and Power Sustainable, and -CAD 88 million in terms of contribution, largely driven by the two items that you can see on the left-hand panel. One is the snow cover and during the year was more than normal and operating results on our infrastructure, energy infrastructure was down CAD 30 million in the quarter. The second one is the CAD 33 million on the revaluation of the NCI liabilities. You know, you saw that in the last quarter and the last couple of quarters actually, and we expect to see that in the future as well. We have a number of assets that we are basically bringing to a completion.
I think we've got about, in total, capital on energy projects, in the West, about CAD 350 million of projects that have yet to come on stream and go COD. As they go through that process, there will be revaluations throughout the coming quarters. We'll expect to see those NCI charges in the future quarters as well as those projects are basically coming to completion and on stream and then transferred into the fund. One of the things we will do in the quarter, this coming quarter is, reach out to you and give you a little more transparency on how we anticipate that number to unfold as we go through the coming quarters.
Other than that, I think I don't have anything more on that page. I just go to the next page, which is the net asset values. You can see that we're at 46.89, which is up 11.9% over December. That's driven on the back of Great-West Life and IGM and GBL. You can see that in the table that 85% of the portfolio is basically in those operating companies that are publicly traded. When you look at May 15th's net asset value, we're up another 4.4%. With that, Jeff, I turn it back to you.
Okay. Thank you, Greg. Okay, I'm going to then spend a few pages on some of the transactions that we announced during the quarter and share our perspectives with them, with you. The first is on page 13, and it's Canada Life's acquisition of Investment Planning Counsel from IGM. I think this is gonna prove to be a very smart move for Canada Life as we look back on it a few years from now. It does a number of things for them. It really positions them by giving them the tools and the scale to build a leading wealth management platform for their advisors and clients.
Now, with CAD 85 billion now that they have between Quadrus, between their seg fund shelf, which is a you know, very much like an investment shelf and an insurance wrap, and then now with the scale that they have and the tools from IPC, they will and are capable of building one of the leading wealth management platforms for advisors, away from the non-bank advisors, in Canada. This is, I think, a very, very strategic transaction that's gonna help them grow their wealth management presence. They've got a strong insurance offering. Got a strong group business. This kind of leapfrogs them forward with the tools to build a very competitive wealth offering that we think will play out well for their growth going forward in Canada.
I want to draw an analogy to this and what we've done at Mackenzie over the last few years. We've talked in our strategy about simplifying Power Corp and our structures and how we own assets. Another thing that's gone on is we have actually looked across our group where we can benefit from greater scale and create stronger businesses. An example that would be analogous is at Mackenzie, if you go back over the last several years, not only have we built Mackenzie into a very strong competitor through all the investments and changes that have been made in the investment area and the distribution area, but we gave it scale by, in the first instance, transferring IG Investment Management and all of their assets over to Mackenzie.
Then we followed that up with Canada Life, as you recall, a few years ago, selling GLC to Mackenzie and concentrated Mackenzie with a much bigger asset base to be a more formidable competitor in the asset management business in Canada with scale. We're doing the same thing here. I view it as quite analogous is that you look at IGM already has a very strong presence in the Canadian wealth management business. Canada Life here is able to take what they have, add IPC to it, and build a much more competitive wealth manager in going forward for them. Just some comments on that. It's, I'm not sure it got. I don't know how much attention it looked it got from the marketplace. I think this is a really important move for Canada Life and for our group.
I'm gonna move to page 14. Really excited about this opportunity and what IGM has done in buying a 20.5 interest in Rockefeller. First of all, this is an iconic brand. I don't know if there is a better brand in wealth management and high net worth and ultra-high net worth in the world. I just can't imagine one. Rockefeller is a business that has been built by Greg Fleming and his incredible leadership team starting five years ago. They took the family office business of Rockefeller, and then they built the advisory business around it. We've known Greg and worked closely with Greg for eight or nine years after he left president of Morgan Stanley, I think it was eight or nine years ago. He's been a very close advisor to us.
We got close to him and got to know his management team and had the opportunity to make this investment. I think they have a differentiated position in the U.S. wealth management market. As I said, it's got a unique positioning with a family office at the core and then a very high-end advisor business. They're creating one firm. All of the teams that they recruit come into Rockefeller. They're all on the same platform day one when they join. It is one company, one culture, one set of systems, a very high-end curated product shelf. The final point is that while they are growing through having advisors join the platform, the advisors that join are at a stage in their career where they are very interested in growth.
This is not providing a ticket for advisors to retire. This is advisors that are in high growth mode. The compensation system motivates them highly for growth. Rockefeller has a lot of organic growth in addition to the advisors they're recruiting. Let's, as I said, we're very excited about it. It's a risk-smart way for IGM to get into the U.S. market with people we know and a model that we're comfortable with. I will then broaden this out and just kind of draw the lens back a bit on what IGM has done. I look at IGM right now.
I think you're well aware of all the changes that have been done at IG Wealth in Canada, starting with Jeff Kearney and then Damon and their team. You're aware of how we have strengthened Mackenzie. IGM's now got two very, very strong engines in wealth and asset management in Canada. You couple that now with a very high growth engine in the U.S. market and by putting the ChinaAMC stake, which we did in the first close, in the first quarter. IGM's got these two strong engines of growth in Canada and then two vehicles for growth in the two biggest markets in the world, the United States and China.
Really, you go back over the last five, six years, we've transformed IGM here, into a different company than what it was, and very excited about this deal, obviously. Okay. Wealth, Webhelp. This is as close as I'm gonna get to an accounting lesson, when you'll ever hear me on these, on these talks. Webhelp is really illustrative of some of the two parts of Power Corp and howWe look at them from a value point of view. And it's also a great deal for GBL and validation of many of the great things that they're doing. As you know, Great-West Lifeco.
IGM, I think it's up to about 78% of our gross asset value now that we have purchased the additional Great-West Lifeco shares from IGM. That 78% is the source of our recurring earnings. The rest of it is GBL, the platforms, the stand-alone businesses. We don't look at earnings as the measure as to how those businesses are doing because they're investment positions. Some of them are early stage, they go up and down in value over time. Obviously, we are thinking that they're going up in value, and they have, but they go up and down with marks. We have a number of businesses where we consolidate them, and we have minority positions.
As they go up in value, we actually recognize the increase in the value of the minority interest, but we don't recognize the increase in the value in our position. I'll turn to this slide. GBL announced a transaction to merge Webhelp and create a value for themselves of EUR 1.5 billion. This was an investment they made in 2019, and it's 1.8x multiple on their invested capital. Through the piece, as the value of Webhelp has been going up, as I said, GBL has not recognized those increases. If you go to the bottom of the page, they have recognized EUR 1.3 billion of cumulative losses that are associated with the increase in the value.
Here we have something where it's been an unbelievable investment, great IRRs, and the way the accounting works is they've got $1.3 billion in losses to show for it. When the transaction closes, that $1.3 billion will reverse, and the gain will be recognized on the transaction at whatever the value of the shares are at that time. You know, great deal, validation of their value creation strategy, and also a great illustration as to why we don't look to the earnings that come from GBL or from the Power Corp assets as our benchmarks for how they're doing. We do that with Great-West Life and IGM, but not that 22% of our portfolio. I'm going to turn some comments to the platforms.
really page sixteen, really difficult fundraising environment, but there was still CAD 300 million just under CAD 400 million of fundraising that was done in the first quarter. That was through a European fund that Sagard completed, and also Sagard completed a senior lending fund in their private credit business, which is a new product for them. In addition, Power Sustainable Capital announced during the quarter the launching of two credit funds. This is a new product for them. It's infrastructure credit, and they announced a global infrastructure credit fund with a team in the U.S. and a U.K. fund with a team in the U.K.. No fundraising there yet, but they've announced the hiring of teams and the launch of two new products. Good progress.
I would show you, if you go down to the bottom left on page 16, under the Funded there, you see Power's capital is now CAD 2.4 billion of the CAD 15.8 billion that has been raised. That's Power itself. Canada Life has money in their platforms as well, but Power Corp's CAD 2.4. That's about the same as what it was two, three years ago, even though that funded number has grown, I think, about four-fold over the last three years. Power Corp's investment has stayed the same. When we talked about growing these platforms and not using our balance sheet, but you know, this is a perfect illustration of it. With that, I'll turn over to page 17.
When we look at the first thing we're looking at in building the alternative investment platforms is the fee-related earnings. On the bottom left, you've got the fee-related earnings of Sagard and of Power Sustainable Capital. You see good growth in revenue at Sagard and still slight losses at fee-related earnings. There is. So they have built up their platform. There's a number of things happening there in terms of building up of staff. There's a little bit of a catch-up fee in Q1, a few CAD million. If you normalize for that, the 2 is probably a little bit lower than that, a few CAD million lower than that. They're just...
You know, Sagard continues to build out its capabilities, grow its staff, build its platform, It's operating just below breakeven is the way we think about it. Power Sustainable Capital, I've already mentioned about good growth, new products, new funding, but at an earlier stage in its development in terms of the fees that it is collecting, but in an area where we think there's pretty explosive growth in the years ahead. Those are my comments on our platforms. I'll turn to page 18. You know, we talk a lot about the standalone businesses, I wanna make a comment here. You know, when we launched the strategy around the reorganization, we talked a lot about the platforms as being, or excuse me, the standalone businesses as being a source of capital.
The way our strategy has worked out, the opportunities to raise capital and return it to shareholders have actually come from different parts of the portfolio. You know, from the beginning of 2021, we have raised CAD 1.8 billion of capital, but it hasn't come from the standalone businesses, which we kind of indicated at that time it would have. It just goes to show that you need to be active in the management of these strategies. Our goal hasn't changed, but how we've executed it has changed given what happened in markets. You know, the CAD 1.8 has come from a variety of sources. I think we told you last year or 2021, we took, we sold our secondary interest in Sagard Europe 3.
We took some money off the table with Wealthsimple. We sold energy assets into the Power Sustainable Energy Fund and took money back from that. We sold GP Strategies. We ended up selling our stake in China Asset Management to IGM and took back Great-West Lifeco shares and cash. We've just announced the sale of Bellus Health, which will be another approximately CAD 100 million when that closes. You know, we've raised CAD 1.8 billion over the last couple of years. Yet we still have, you know, Lion and Lumenpulse and Peak in the portfolio. We have taken steps to surface value by taking Lion public and Lumenpulse just did a financing in the last couple of quarters.
We are on path nonetheless to raise capital and then return it to shareholders. With that, I'll turn to 19. During the quarter, we returned approximately CAD 375 million to shareholders through our dividends and through buybacks. Last year, by the way, we returned about CAD 1.7 billion to shareholders. We had CAD 1.3 billion in dividends and CAD 450 million in buybacks. We've done all this, we now have our cash at kind of an unprecedented level. Got about CAD 1.7 billion in cash. If you deduct the dividend that we declared yesterday from that, you get to CAD 1.35 billion if you take off the dividend payable.
We like to keep two times fixed charges, so we got lots of firepower here. With that, I will turn to page 20. One of the things we are focused on is a net asset value discount. We were, as you know, before the reorganization for five years, they were trading around 35. We've done a good job through communication and transactions of reducing it. It has gapped up in the recent period. I mean, we can have a long discussion about why that is. I just simply summarize it that this is an opportunity. Not happy about it gapping out, but it's an opportunity both for investors as well as for PowerCorp as we, in terms of buybacks.
We have had our heads down a lot in the last six months or so working on a number of things, including some of the transactions we announced. We're really looking forward to getting back out and talking to investors in a more active way than we have in the last period about what we're up to, what we've done, and what are some of the opportunities going ahead. With that, operator, I think I will ask you to open up the lines for questions that we may have from our participants.
Absolutely. We will now begin the question and answer session. To join the question queue, you may press Star, then One on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press Star then Two. We will pause for a moment as callers join the queue. The first question comes from Geoffrey Kwan with RBC Capital Markets. Please go ahead.
Hi. Good morning.
Good morning.
My first question was for your non-core assets such as Peak and LMPG. Can you talk about maybe what some of the metrics or things that you're kind of looking for to be in a position to eventually monetize it?
Thank you. Good question, Jeff. While we have announced our strategy focused on financial services, and long term, those are not, you know, core assets, if I can put it that way. They're not on strategy. We were very clear on two things. One was that we, you know, we don't have a gun to our head. We're going to realize value in a way that we think will maximize value for PowerCorp. Secondly, we are an investor, we are good partners with people that we join with, and we made commitments when our strategy was different to the management teams and to other shareholders. We honor our commitments and do things in a sensible way, not in a hurried way. Now specifically, let me give you some examples.
With Lumenpulse, you know, right after we announced our new strategy, the COVID hit. All of a sudden we had this company that was really doing well and growing and making acquisitions, and its whole business model just got totally turned upside down. Projects got stopped. A lot of what they do, you know, are often on big projects, sometimes at the tail end of projects. They ended up, their whole business plans weren't there. It was just not a good opportunity for us to realize capital. As you know, we filed for an offering, I think it was in 2020, but my memory may serve me wrong there.
They did a third-party financing in the last couple of quarters, which is great. That's the next step. At some point, we'll think that the value is, you know, there and the business plan is at a good point where we can bring in some other investors and start to monetize our position. We're not going to do it in a way that we're leaving value on the table, and the timing wasn't there. Lion is a really interesting one. Lion was only CAD 53 million, CAD 54 million at the time we announced reorganization that we had invested in it. Then electric vehicles took off. We took the company public as a step in realizing value.
All of a sudden, the bloom was off the rose in terms of everything that was venture capital and everything that was EV, all of a sudden, this company needs capital to grow. We have this great company and all of a sudden, you know, there's the capital markets and the VC markets have shut down. Do you try and push it out and just, you know, drop it when it's got this great future? We actually put some more capital in the last year, $25 million U.S. to support their offering. You know, you could say, "Well, what are you doing?
That's off strategy." Well, it's CAD 25 million in the context of PowerCorp, and we're supporting the management team and other shareholders to make sure we get the company to a point of maturity where its proper value can be recognized and ultimately realized by PowerCorp. You know, I don't know if that's answering your question. I'm sharing with you how we look at these things. We do things that are smart. We do things that maximize our value, and we do things that honor our commitments to the partners we have. In the meantime, we realize value using other assets where there were opportunities. That's it.
Okay, thanks for that. Just my other question, just given the dislocation we've seen in credit markets and just more broadly speaking, wondering if you can talk about how you see that in terms of, say, for example, opportunities for your existing operating businesses and then on your kind of alternatives platform, whether or not that's making opportunistic acquisitions, potentially strategy. Also too is for the companies that are within the portfolio, if that might create any sort of headwinds in terms of if there's any sort of debt refinancing that need to happen with them there.
Okay. I'll start, and then Greg, if you jump in as always, jump in if you, if you wanna add anything. You know, I think that if credit markets end up getting dislocated, we've just got some fresh powder in our credit funds and Sagard, and I think that will be a good thing. They'll get some opportunities to earn some good in-investment returns for their investors. Whether in behind your question, there'll be an opportunity to... I don't know if that's it, to acquire a credit capability. I don't think that's on the radar screen. It might come by, who knows? I don't know whether that was where you were going.
In terms of our own financing structures, if you're asking about our own companies and their maturity, certainly between IGM, Great-West Life, GBL, PowerCorp, we don't have any worries about refinancing. We've got very strong credit ratings, and we've got very staggered debt maturities, which we're always for decades have made sure we manage. I couldn't speak to, you know, the individual companies within our different portfolios in the alts area, if that's where your question's going. Maybe you can clarify a little bit that one. I wasn't sure where you were talking about in terms of difficulties with our own companies in credit markets. Do you wanna just be clear?
Yeah. Whether or not within Sagard or Power Sustainable.
I'm not aware of any. I have not heard anything that they're concerned about credit markets. I think in the fintech world, I will say, you know, when you've got Silicon Valley Bank, they were a big funder to a lot of the fintech companies. That sector in general, of course, not just in our portfolios, in general, has got all of a sudden a player who was probably the leading player in terms of banking those businesses is out of business. I know that has created some shortage of capital across the fintech space, and I suspect that will be an opportunity. Everybody's for our funds in terms of making investments because we got capital to work, to play. That's a general comment.
Yeah, that's exactly where my mind went.
Yeah.
To that question, Jeff. You know, certainly management is working through, you know, getting those startup entities that need capital and, you know, obviously raising capital where they can and looking for alternatives. That's a work in progress, but nothing that I think is disrupting their strategies in that marketplace would be my take on it.
Okay, great. Thank you.
All right. Thank you, Jeff.
The next question comes from Jaeme Gloyn with National Bank Financial. Please go ahead.
Thanks. First question just related to the Rockefeller transaction. Clearly you guys and the family had a significant role in putting that together. Just curious if you could talk a little bit more about the history of that deal coming together. You know, are there other such opportunities available within the Power Corp blocks through those relationships?
Okay. I touched on it. It really started with a relationship with Greg Fleming. Greg Fleming, for those of you who don't know, was the president of Merrill Lynch, was president of Morgan Stanley. He initially ran investment banking at Merrill, was president through right through the financial crisis, Merrill got sold to B of A. He went over to JP Morgan, ran their wealth management and asset management businesses. 2000 and, I want to say 15, it's somewhere around there, he left and kind of did his own advisory thing for a while, trying to figure out what he was going to do next.
We actually hired him as an advisor, and he ended up being kinda for the three years, someone who we would talk to at least weekly about what the opportunities were in the States. He was also on the Empower board. He is on the Empower board and on the Putnam board and has been through 2015. We have a close relationship with Greg. Greg announces to us that in 2018, he's done a transaction to buy into and become CEO of Rockefeller and brings in the A team, if I can put it that way.
Former colleagues from the top balls bracket firms in the U.S. takes advantage of the dislocation going on, particularly at the high end of the big balls bracket firms who have become, you know, very large and the very top kind of 1% or 2% of the advisors, not always the happiest campers in that environment. They've taken advantage of that to build out what is now Rockefeller, where I think they've got 90 teams that they've built over the last five years of. You know, a team might be three, four to, you know, 10 advisors coming over that have joined them. We talked to Greg all the time. Rockefeller, you may have noticed, has advised on our acquisition of Personal Capital, MassMutual, or Prudential.
We're talking to them closely. Through that relationship, spoke to them about what are your future plans for Rockefeller? 'Cause, you know, we're looking to expand into the U.S. into wealth management. That led to discussions which led to the transaction. That's the history of it. Jaeme, did you wanna add something? Greg?
Yeah. I'd just say that in a stepping back even to in time that it's part of the DNA of the group, quite frankly, in that Paul and André and of course, their father had a particularly good expertise in developing ecosystems. You know, I think if you look back through our history, you can see many examples of this type of relationship turning into something that was unexpected.
Thank you. Thanks for reminding me that. In this particular case, 'cause I just told you with Greg Fleming, but the Rockefeller family and the Desmarais family have a relationship going way back. André Desmarais personally has had a close relationship with David Rockefeller, who's on the board, and the shareholder of the company and his father. There was all that angle to it as well. You know, that there was the Desmarais angle, and then there was the management angle, and it kind of all came together here. Thanks, Greg.
Okay, thanks.
Does that answer your question? Yep.
Yeah.
You asked whether we were gonna do others. I don't know whether we're gonna do others. I mean, we're like... I'll just show you the 20 deals we've done in the last six years and ask you. I don't know, but we do have our eyes open, Jamie, at all times.
Yeah, understood. Then, just a clarification question on the BELLUS transaction. Is that CAD 73 million that you're expected to receive? Is that that's cash receipt? Then, I guess the other part of that is it already included in the CAD 813 million of NAV that you've disclosed here? Just wanna clarify that.
It's outside the CAD 813 to start with. The CAD 73 is coming in cash. We're not taking any shares back on that.
$73?
It's U.S., too. Yeah.
100 sounds better, doesn't it, Greg?
It does.
Yeah.
Okay. Thanks, guys.
We have that I think we have that marked on our books at zero in terms of book value.
Right.
Yeah. Not that we look to earnings for that part of the portfolio. Sorry, go ahead, operator.
The next question comes from Doug Young with Desjardins Capital Markets. Please go ahead.
Hi. Good morning. Maybe starting just with the excess cash. I mean, last quarter, I think Jeff or Greg, you said, you know, two times debt coverage was CAD 700 million, it's CAD 800 million. I don't know if there's a nuance there, but, just want clarification on that. If I do the math based on what you've laid out, looks like your excess cash is sitting at CAD 550 million, and as you've said, you've got lots of liquidity here. Why the slowdown in buybacks?
You know, we've as I said, we've had our head down quite a bit, working on a bunch of things as you've seen. You know, that's the answer. I don't think there's anything on the 800 in the. Like, our, I think that's a rounding.
Rounding. Yeah.
There's been no change in our run rate costs. We should go back. I don't think-.
Seven hundred and eighty to be-
CAD 780?
Right.
It was last time as well, or 770 or something?
Yeah.
Okay.
It's-
Yeah.
It's rounded.
Yeah. You know, we don't manage it to that finer point in terms of having two times coverage. You know, we've gone below it sometimes, and we've often run above it. Yeah. I think this recent period, we've not only been out kinda talking to investors for the last... We've been less active on the buyback side. We, as I said we've been busy on a bunch of things and looking forward to getting back on both. That's all I can say. What?
Okay.
Sorry. I don't know if that works.
No, that's fine. Just going to the Power Sustainable, the two items, I guess, you know, the energy infrastructure loss due to seasonality and snow, I kinda get that. What I guess I'm more curious about, you've taken a CAD 33 million revaluation of NCI on the Power Sustainable Energy Infrastructure. Jeff, you kinda described it in how you've done this in the past, but you don't get to realize or write up the value, you know, of these entities. You just take the hit up front. What is the unrealized gain on the Power Sustainable Energy Infrastructure Partnership that hasn't been recognized?
I don't know the answer to that. I don't know if you do.
I don't know that I have that right now, Doug, but maybe as we go through the call, it'll emerge.
I did give you a number that we're vending in projects that we currently have on the balance sheet. Basically wind projects out west. There's about four or five of them that I think the capital that we have in them is about CAD 350 million. We would expect to get a gain or a revaluation again on those as they come to commercially viable projects. So we'd probably get somewhere in the neighborhood of CAD 40 million-CAD 60 million of gain coming through at that time, of course, of which we will have to take a NCI liability on.
60% of that because we're 40% of that particular fund and the other partners are 60. You know, we're talking about another $30 million on that project, or those set of projects alone. Of course, we're developing projects in addition to those that will be vended in, and we'll have the revaluations. That's what I alluded to. I think that, you know, over the quarter, what we'll do is we'll reach out to the street here and try and lay that out so that you can understand and anticipate what might be evolving over the next several quarters.
Yeah. We have to have greater clarity on this because we have lots of questions on it. Your question is a good one, Doug.
Yeah. I just think, like, I kind of follow where you're going with it. You've had a bunch of these over the years. If there's unrealized gains that aren't properly being reflected now, I'd be curious. If it's not just this, there's a number of them, I'd be curious what that conservatism is, and I think other people would be as well. We can kind of leave that for now. I guess, you know, maybe I'll kind of give a last high-level question. You know, our view is always, you know, the cleanup of the Power structure would mean running the small whole co and concentrating, you know, most of the insurance business at Great-West and the wealth and asset management at IGM. You know, you've talked about this before, but you're building an investment platform up in Power.
You've moved IPC over to Great-West. There seems to be a blending of the two. Maybe, Jeff, like, what's the end goal here? Like, what am I missing? What's the end goal here? What does a clean Power Corp structure look like when you're all said and done?
Yeah. Lots of things happening. That's a, that's a big question. A lot of different forces at work, not just simplifying. That's what I made the comment earlier. When I look at Mackenzie acquiring IG Investment Management, which you may say is all inside of IG, that's to give Mackenzie more scale to compete. When I look at GLC two years ago, was it, that, Great-West Life sold Canada Life sold GLC Asset Management to Mackenzie. That is concentrating scale at Mackenzie. Same thing happening here at IPC. IPC is a CAD 33 billion wealth manager, there's another CAD 50 billion over at Canada Life.
Putting it together, plus all of the capabilities that they have in terms, you know, creates a more competitive platform because we're not just cleaning up and simplifying Power's platform. We spend a lot of time strategically working with the management teams of Great-West Life and IGM to position those businesses for greater growth. You're seeing. Some of these deals are not about simplifying Power Corp. They're about getting our main operating businesses in a more competitive position. Your question with respect to Power Corp, ultimately, the goal is to have the standalone non-financial service businesses not within the portfolio. As we said, not in a rush, and I'm not going to do anything stupid to get there.
Then, secondly, create the scale in the investment platforms to create streams of income without putting more capital into it and simplifying what's there so that we don't have a stream of businesses that people don't understand. We're partway down that path, but what we have is an accounting kind of. I won't say. I should not be critical of accounting. We have accounting numbers that make it really hard for people to understand. We are simplifying the business, but we still haven't done a good enough job of explaining the value creation, and it gets lost in the accounting. I don't know. I said a lot there. In a nutshell, I said a lot of the moves are not just about simplification.
They're about building the strength of the businesses. The second part is we are trying to simplify Power so that at the end of the day, you can say they got this asset management business, and they got this much seed capital, and the seed capital is producing this kind of a return. I can value it, and therefore, I can get my hands around it. That is the end goal. Sorry for the long answer.
No, no, I appreciate the color. Thank you.
Okay. Thanks, Doug.
Doug, it's no good. Doug, page 56 of the MD&A, you can look at that to get more color on the position of Power Sustainable and the Power energy assets. Just on the energy assets alone, I think the unrealized value would be somewhere around CAD 400 million in total, and we would have 40% of that. You know, roughly CAD 150 million-CAD 160 million.
Thank you.
Yeah. Let's follow that up. Okay, great. Thank you.
The next question comes from Graham Ryding with TD Securities. Please go ahead.
I just have one question just with the Canada Life platform now with the wealth platform with IPC as part of it. Can you just sort of describe your vision for this platform relative to what you have at IG Wealth? How are they similar, and how are they perhaps unique and different?
A great question. Thanks, Graham. First of all, in terms of vision, IPC not only brings scale to the Canada Life platform, but they also have a far greater IIROC capabilities. They've got discretionary platforms. As you know, a lot of advisors move to a discretionary model, whether discretion is given to the house or discretion is with the advisor. So you add all of those capabilities, and it brings with a management team that's very capable as well, that are excited about this. You know, over time, those capabilities will merge into, you know, a far greater suite of capabilities for advisors so they can pick which way they wanna grow, how they want to pursue their careers, how they want to serve their clients.
Canada Life will have an ability to accommodate all of that and get the economies of scale over time from having a bigger platform to do it. That's what it does for Canada Life. The models are different. You know the history of IG Wealth. Its model is changing too, so I have to say. IG Wealth had been primarily, you know, bring in advisors, train them, and then have primarily a proprietary shelf, and it was primarily mutual funds. That's been turned upside down in the last five, six years. You've got the recruiting model that used to bring in many advisors with a, I would say, not a, you know, a certain success rate in terms of turning them into successful advisors.
They've just pared that back four, five years ago to they're trying to hire, like, a fifth of what they were doing. Yes, they've got mutual funds, but they are into wrap programs and unbundled programs, the product shelf has changed dramatically, they're now recruiting from the outside. While it's still mostly IG wrapped product, you know, there are lots of different sub-advisors, and IG itself no longer has IG Investment Management. The IG Wealth model has been revitalized and therefore much more competitive at going after larger clients, by the way, and getting new advisors in. It still has a history of coming from the kind of the IG product side of it's, you know, it's got a different feel and a different culture to it.
Over time, do they become the same 10 years out? I don't know. I'm not sure. That's the best I can do in terms of compare and contrast. I didn't always do well at those things in college, you know. You just gave me that compare and contrast question. They have different histories. They're a little different, but they work. IG Wealth is set up for success within IGM, and I think Canada Life's got itself enough capabilities here to build a great wealth management firm going forward.
Is there a larger insurance component with the Canada Life business relative to IG Wealth?
Yeah. Within IG Wealth or within Canada Life?
Well, yeah, this Canada Life business that is acquiring IPC. Is there a bigger-
Yeah.
insurance component to sort of the wealth management.
Sure.
-platform relative to IG Wealth?
Yeah. Good question. Good question. First of all, Canada Life, it's a, you know, They would consider their advisors to be independent advisors, but the advisors have different practices. Some of them are very wealth-focused. They would have seg funds, which is really just a protected wealth product, and mutual funds and increasingly, you know, wraps and discretionary, so they've got a big wealth practice. Some are at the other end that are very focused on, say, power insurance and high net worth and ultra high net markets. Some of them are a mixed practice between insurance and wealth, and a number of them are also focused on the group market.
They would have individual clients, you know, who are running businesses, and they make a practice out of bringing in group clients that also feed Canada Life's group business. You do have on the many, many advisors that work with Canada Life, a myriad of practices. A lot of them have wealth as a some part or an important part, and in some of their cases, the most important part of their practices. This sets Canada Life up to be a much better home for those advisors going forward as they build out these capabilities.
Okay. That's helpful. Thank you.
Okay. Great. Thank you, Graham.
The next question comes from Tom MacKinnon with BMO Capital Markets. Please go ahead.
Yeah, thanks. Good morning. More of a theoretical kind of question, Jeff, here. I mean, you've simplified Power, as a result... What you had before was maybe more of a complicated Power Corporation, somewhat more pure plays down below without kind of, you know, significant impact from, say, quote-unquote, "other vehicles." Now, if I look, if with ChinaAMC now pushed down into IGM, Wealthsimple still at IGM, Northleaf now at IGM. There's still some Great West at IGM. There's now Rockefeller at IGM. Like less than 75% of IGM's earnings are really from IG Wealth and Mackenzie. I understand the strategies involved in here, have.
This is not necessarily a kind of a pure play anymore, and even the push from the IGM people is to almost do a bit of a sum of the parts or almost an NAV valuation approach to IGM. I'll just make the statement. You've certainly simplified Power, but have you made the downstream company IGM a little bit more complex now? I'm just curious as to what your comments are with respect to that.
Good. Good question. I don't think we have, but I think the brands can kind of get in the way of what's actually going on because I'd describe the strategy a little more simply than that. IGM is in the wealth management business, and it's in the asset management business. In the wealth management business, it's got one business in Canada, which is IG Wealth, which is a much more mature substantial business. It's got a stake in Wealthsimple, which, you know, over time could prove, you know, as we look at we're long-term holders, as you know, we'll look back in 10 years and say, "Is that a significant part of IG Wealth or is it not? Or of IGM issues or not?" I don't know.
That's kind of, you know, an investment in the future, which their cost base, I'll remind you, is zero. Actually, it's negative right now because that's kind of not even. That's a stake in the future, an exciting one, but I don't view that as noise. It's not complicated. It just is what it is. They have a leading wealth management business in Canada and IG Wealth poised for growth, and they now have a 20% interest in a very exciting position in the U.S. Hopefully, over time, we can increase our position in that company as opportunities come out. We'll see. That's their wealth management platform. In asset management, they have Mackenzie, but of course, alternatives are very much where the puck has been going, so they take an opportunity to buy Northleaf.
That's smart if you have an asset manager, and Mackenzie's not just sitting passively with that. They're taking the alternative products and incorporating them into their products and bringing them to the marketplace. It is what asset managers, many of them are doing around the world, buying into alternative space. They're in the wealth management business, they're in the asset management business, and they now have vehicles in China and the U.S. on top of their Canadian market. That's the way I think about it. The sum of the parts and looking at the strategics was, I think, really a means by which IGM was pointing out to the market that there's a chunk of their portfolio that wasn't really earning money.
Take Great-West Life out of that for a second. was at an earlier stage of development and trying to and even ChinaAMC at the time was, you know, not earning as much money. It's been growing, it's earnings a lot, kind of focusing on the fact that, "Hey, maybe these businesses are worth over here, Mackenzie and IG Wealth are worth X times earnings, but this part of the portfolio is to be looked at on a different basis." I think that's what they were, in my view, doing in terms of putting it together as strategic investments, but not... That's my answer to the question. Great-West Life, all I'll say is, you know, just watch us by our actions. you know, that we set that position up a long time ago.
IGM used that as currency in terms of our CMAC transaction. Great-West Life, I mean, the natural home for that is at Power Corp in terms of our ownership. We took advantage of that transaction to increase our stake at Power Corp and Great-West Life. That made the financing of that transaction work for IGM, and we were happy to buy more Great-West Life. We're very excited about what's happening. That's what it is. I don't view it as complicated. Maybe it's just clear in my head what we're doing, but I don't view it as complicated.
Understood. Thanks.
You know, if we didn't brand. You know, some companies, Tom, you know, I'm going to make a comment about one more comment on this. A lot of companies, your own employer, many big financial institutions, when they buy things, they brand them with their own brand. You know, BMO this and BMO that. Even my old stomping grounds, Nesbitt Burns or BMO Nesbitt Burns. You know, we have had a different approach where we have left brands standing in their local markets because we thought that they had. We thought they had a lot of value. I think it ends up people looking at us and saying, "Wow, you're really complicated because you've got this brand, you've got that brand, and you've got this brand." When in fact, we're a wealth manager and an asset manager at IGM. That's what we are.
We probably end up looking a bit like a Christmas tree when with all kinds of ornaments on it, when in fact, we're really in some pretty simple businesses. I'll tee off your question to talk about Great-West Lifeco's new disclosure, because Great-West Lifeco this quarter introduced what they're calling their growth drivers, but is really a new way of segmenting what the businesses they're in, right? Starting with workplace solutions and wealth and asset management. Other companies describe themselves that way, and we don't. We tend to use our brands, then people think we're complicated. I don't think we're that, you know. I think we're in two or three pretty simple businesses around the globe.
Yeah. I mean, maybe I'll just add one comment on that. There was, in terms of this multi-brand approach, you know, with respect at the Great-West Life level, years ago, there was like at least four brands, Great-West Life, London Life, Canada Life, Freedom 55. The decision made there was to put it all under one brand.
Yeah.
It wasn't gonna be like a Christmas tree. Is there anything you hear about amalgamating things-?
Um, I don't-
at the IGM level?
Yeah, I don't see that because Rockefeller is a great brand in the U.S.. You're not gonna call it IG Wealth, huh? By the way, we don't control it, so that's another reason. Like Mackenzie is an asset manager that you're not gonna put its brand the same as IG Wealth. I don't see us doing that right now, is the answer. I think we just have to make sure we explain our business in a way that we think of it, which is this is our wealth management activities, these are our asset management activities. I think we need to move more in that direction, so we don't unnecessarily confuse people.
I think I'd just add on that, Jeff, is that the other perspective when you're looking at the brands is obviously the brands that are client-facing and-
Sure.
How they face the client. You know, the distribution channel interplay with that is, you know, Mackenzie is Mackenzie to their clients. The brands that they're using for alternative asset managers stand behind them and are on the product shelf. I think that's well understood in the distribution channels and to the, and at the client face.
Yeah.
I think that's the other perspective.
Yeah. I think even BMO would do that and other banks in some of their markets, they don't report to the market that. They won't report, you know, BMO won't report on its U.K. or its European asset management businesses, the name of the brand. They'll just say, "Our asset management businesses," when they report to the market. When they interface with their clients, they actually have more brands than that. We tend to report to the market that way and I think create some confusion. Anyway, you said it was a high-level question. We're dealing at a high level here, Tom.
I always appreciate discussion, so thanks very much.
Thank you, Tom.
Ladies and gentlemen, there are no further questions, so this concludes your conference call for today. Thank you for participating, and you may now disconnect your line.