Morningstar DBRS Changes the Trend to Stable From Negative, Confirms Credit Ratings on CI Financial Corp., Including CI Investments Inc.'s Issuer Rating at BBB (low) and Withdraws All Credit Ratings

DBRS Limited (Morningstar DBRS) changed the trend to Stable from Negative and confirmed the credit ratings on CI Financial Corp. (CI or the Company) Senior Unsecured Debentures, including the Issuer Rating of CI's principal subsidiary, CI Investments Inc. (CII) at BBB (low). Lastly, Morningstar DBRS has withdrawn the outstanding credit ratings on CI and CII for business reasons.

KEY CREDIT RATING CONSIDERATIONS
The change in the trend to Stable from Negative reflects Morningstar DBRS' assumption that the privatization by Mubadala Capital will be approved and finalized by the end of Q3 2025. As such, the privatization transaction will enhance CI's access to financial resources given the substantial scale of Mubadala Capital's parent, Mubadala Investment Company, which is a global sovereign investor based in Abu Dhabi, United Arab Emirates, with more than USD 300 billion in assets. Furthermore, Mubadala Capital is expected to contribute up to $750 million in cash to reduce the amount of outstanding preferred equity, which has highly favourable terms for the preferred equity holders.

If there were no privatization transaction, the credit ratings would have continued to experience downward credit rating pressure reflecting the Company's continued weak financial performance and high leverage. Specifically, profitability, as measured by the EBITDA margin, has significantly declined over the recent period while net income turned negative in 2024. The already high leverage levels have further increased. In the meantime, CI's expansion strategy is ongoing with the Company announcing three transactions since December 2024, including the largest registered investment advisor (RIA) in Maine with approximately USD 7.9 billion in assets under management. 

The credit ratings are supported by CI's significant scale consisting of strong market share in the Canadian asset management industry, as well as the strong presence in the wealth management business following the numerous acquisitions completed in the U.S. RIA market over the last several years.

CREDIT RATING DRIVERS
Given that Morningstar DBRS has withdrawn all credit ratings on CI and CII, there are no credit rating drivers.

CREDIT RATING RATIONALE
Franchise Building Block Assessment: Strong/Good
CI has a strong market presence in the Canadian asset management sector, and, through its acquisition strategy, has become one of the largest national RIA firms in the U.S. Its significant scale and a deep set of products allows it to effectively compete in its chosen markets while diversifying its sources of earnings by product, geography, and client type. CI reported $546 billion of total assets under management and advisement as at Q1 2025, an all-time high.

Earnings Building Block Assessment: Moderate
CI's revenue is coming from increasingly diversified sources especially benefitting from wealth management revenue growth following numerous acquisitions in the U.S. RIA market. Nonetheless, expense growth has outpaced revenues resulting in negative net income in 2024. Similarly, CI's EBITDA margin and the return on equity have been persistently declining over the last few years.

Risk Building Block Assessment: Good/Moderate
Operational risk remains elevated as the Company continues its growth strategy, announcing three new transactions (one of them of a significant scale) since December 2024 while it continues with its integration of prior acquisitions. The pre-IPO investment exposes CI to significant market risks, although those would be significantly reduced following the successful close of the privatization transaction and the expected contribution by Mubadala Capital of up to $750 million in cash to reduce the amount of outstanding preferred equity.

Funding and Liquidity Building Block Assessment: Moderate
CI has a significant amount of outstanding debt ($4.2 billion as of Q1 2025, an increase from $3.6 billion held one year ago), which has had an adverse impact on its financial flexibility and the ability to withstand a stressed environment. While Morningstar DBRS does not expect the debt burden to materially change following privatization, the Company's access to financial resources is expected to improve on account of the financial strength of its future parent company. CI also has access to a recently expanded $950 million credit facility from Canadian banks, of which $608 million was drawn as of March 31, 2025. Morningstar DBRS expects that the Company will renew the credit facility by end of May 2025 and that it will continue to access it for various acquisition-related expenses. 

Capitalization Building Block Assessment: Weak
Already deteriorating, the Company's gross debt-to-EBITDA ratio significantly increased in2024 and now easily exceeds 3 times. Similarly, the fixed charge coverage ratio has deteriorated. Positively, following the privatization announcement and the subsequent purchase of all outstanding CI shares by Mubadala Capital, CI's share repurchase activity has halted, helping the Company retain more of its cash flows.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental, Social, or Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (May 16, 2025) https://dbrs.morningstar.com/research/454196

Notes:
All figures are in Canadian dollars unless otherwise noted.

The principal methodology is the Global Methodology for Rating Investment Management Companies (December 4, 2024) https://dbrs.morningstar.com/research/444102. In addition Morningstar DBRS uses the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (May 16, 2025) https://dbrs.morningstar.com/research/454196 in its consideration of ESG factors.

The following methodology has also been applied:

Morningstar DBRS Global Corporate Criteria (February 3, 2025)
https://dbrs.morningstar.com/research/447186

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found on the issuer page at https://dbrs.morningstar.com.

The credit rating was not initiated at the request of the rated entity.

The rated entity or its related entities did not participate in the credit rating process for this credit rating action.

Morningstar DBRS did not have access to the accounts, management and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is an unsolicited credit rating.

For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS's trends and credit ratings are under regular surveillance.

For more information on this credit or on this industry, visit https://dbrs.morningstar.com.

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