Wellington-Altus Financial sets blistering pace to $30B in AUA

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This article was published 05/09/2024 (368 days ago), so information in it may no longer be current.

When Wellington-Altus Financial Inc. acquired Ontario investment management firm Wickham Investment Counsel Inc. last month, the move pushed the Winnipeg-based company well above $30 billion in assets under administration.

After only seven years in business, it is already more than three times larger than then-eight-year-old Wellington West Holdings when it was sold to National Bank in 2011. (Wellington-Altus chairman Charlie Spiring and CEO Shaun Hauser were part of the founder groups of both firms.)

This week, Wellington-Altus entered into a credit arrangement with Los Angeles-based alternative investment manager Ares Management Corp. to ensure it continues to have access to enough cash to continue to pursue deals like the Wickham one.

It is the first debt instrument the Winnipeg company has ever held, having been able to finance growth to date via some modest third-party equity investments.

“The last thing you want to do when you’re small and just growing out of the gate is to have a debt covenant define your strategy,” Hauser said.

Now that it’s a sizable entity with substantial cash flow, taking on a credit facility arrangement with Ares — which operates as a financial services receivables-based lender — makes much more sense.

“Fast forward from where we were seven years ago … We are afforded these luxuries of size to be able to finance our future growth with better prices than what we would have been afforded with by private equity financing,” Hauser said.

“This is just a byproduct of our success.”

Hauser estimates Wellington-Altus boasts the fastest growth of acquired assets in the financial services industry.

But attracting and acquiring adviser teams from bank-owned dealers or other institutions does not come cheap.

Hauser said Wellington-Altus would draw down from the new Ares credit facility when it needs to, for instance, to provide incentives and for straight-up acquisitions.

In most cases, the partners in acquired firms receive some amount of equity in Wellington-Altus.

“The reason you need financing is because when you buy the asset up front, the asset takes a little bit of time to bring over from the redeeming institution (where the acquired firm had housed its assets under administration),” Hauser said.

“Your cash flow invariably catches up to the asset that you purchased, which is really no different than all sorts of mergers and acquisitions in any industry.”

Earlier this summer, its Wellington-Altus Private Wealth division was recognized as Canada’s top-rated investment dealer for the fifth consecutive year in the 2024 Brokerage Report Card, conducted by industry publication Investment Executive.

The company is growing by $4 billion to $6 billion per year in assets under administration.

Hauser and Ares would not disclose the size of the credit facility, other than to say they have access to tens of millions of dollars in the deal.

“I don’t like talking about specifics,” Hauser said. “But the most expensive form of financing your business is through private equity … Now, we’re afforded the luxury of getting to play the long game irrespective of market conditions, which is fantastic.”

Hauser said the good news is it’s unclear on just how much credit Wellington-Altus will need, because its cash flow is “really starting to roll.”

“So what we like as a management team is peace of mind,” he said. “We like peace of mind and Ares is the best peace of mind that we could acquire.”

martin.cash@freepress.mb.ca