Wellington-Altus Financial sells 25% stake to Kelso & Company for $388M

A Winnipeg-based investment dealer is poised to exceed a $1.5-billion valuation after getting what it calls a “vote of confidence” from a U.S. private equity firm.

Kelso & Company, based in New York City, plans to funnel $388 million into Wellington-Altus Financial in exchange for a 25 per cent minority stake.

“We think that’s a tremendous vote of confidence,” said Shaun Hauser, Wellington-Altus Financial’s chief executive.

Wellington-Altus has ballooned since 2017. It now counts more than $40 billion in assets under management and staffs upwards of 1,000 employees.

Several branches fall under the parent company of Wellington-Altus Financial, including Wellington-Altus Private Counsel, Wellington-Altus USA and Wellington-Altus Insurance.

In December, Wellington-Altus Financial announced it was looking for a new private equity partner to acquire between 20 and 30 per cent of its equity.

The company said it sought a brand that shared its vision and could support its growth, while offering liquidity for existing Wellington-Altus shareholders and advisers.

Or, as Hauser put it, to give longtime shareholders “the ability to realize some of their wealth on paper, in dollars in their jeans.”

Kelso & Company was a match, Hauser said.

He didn’t express worry about the firm being American, despite tension between Canada and the United States. The company has “high-quality individuals,” Hauser said.

“We couldn’t be more excited about what the next five years holds.”

Its founder developed the employee stock ownership plan, where staff own shares in their employer. Wellington-Altus, similarly, is owned by management and its network of advisers.

At least 80 per cent of Wellington-Altus’s shareholders have agreed in writing to support the sale. The transaction is expected to close early next year; it’s subject to regulatory approval in Canada, among other closing conditions.

Wellington-Altus will remain majority Canadian-owned and qualify as a Canadian-controlled private corporation. The management team will stay the same and the corporate headquarters will remain in Winnipeg, Hauser said.

Cynosure Group, a Utah-based investment firm, had a 15 per cent ownership stake in Wellington-Altus as of December 2023. It directed $40 million to Wellington-Altus that month and has, cumulatively, invested more than $100 million.

Hauser said he views Wellington-Altus’s growth as “base camp.”

“We’re not even close to the summit of the mountain yet,” he said. “We couldn’t be more excited about what the next five years holds.”

He’s envisioning more than $100 billion in assets under management in the next three to five years.

“Some of the smartest investors in the world are really putting down a lot of money as an investment with us,” Hauser said. “I think it gives us even more confidence to what the future holds for us.”

Kelso has raised more than US$17 billion in capital commitments across 11 funds since 1980. In a news release, Kelso partner Bill Frayer lauded Wellington-Altus for its platform, culture and management team.

The company is the “firm of choice for independent advisers in Canada,” Frayer’s statement reads.

gabrielle.piche@winnipegfreepress.com