WisdomTree Investments, Inc. WETF recently announced an agreement to sell its Canadian subsidiary — WisdomTree Asset Management Canada, Inc. — to CI Financial Corp. for a deal value ranging CDN $7-$13 million ($5.3-$9.9 million). However, the deal amount will depend upon the accomplishment of certain assets under management (AUM) growth targets for the next three years.
CI Financial will pay an upfront price of CDN $5 million ($3.8 million), contingent to purchase price adjustments at closing.
Per the terms of the deal, CI Financial will take over all the outstanding shares of WisdomTree Canada. This will help CI Financial operate its business, which will mainly include managing and advertising WisdomTree Canada funds. The transaction is likely to close in the first quarter of 2020, subject to WisdomTree Canada funds’ unitholders’ approval and other customary closing conditions (including regulatory approval).
Moreover, the Canadian arm announced that its U.S. High Dividend Index ETF will be terminated on or around Jan 31, 2020, per the terms of the declaration of trust. The unitholders of this ETF will be entitled to receive an amount equivalent to the net asset value of Non-Hedged Unit or Hedged Unit, as of its closure date. Further, at the closure of trading on or about Jan 24, 2020, the Units of the Fund will likely be delisted voluntarily from the Toronto Stock Exchange.
Benefits of the Deal
The transaction will help WisdomTree’s Canadian subsidiary to be more cost effective in the thriving Canadian ETF market, as it will pass on its index licenses to CI Financial, which are currently under WisdomTree’s proprietary indexes. Further, WisdomTree has strategically banked on opportunities in the Canadian market over the past three years. Also, its Canada funds will benefited from CI Financial’s resources and scale.
WisdomTree continues to focus on growth by boosting distribution capabilities, investing in technology, launching innovative products, and streamlining actions to curb costs.
WisdomTree recently released third-quarter results, which reflected rise in AUM balance on a year-over-year basis, mainly aided by market appreciation and net inflows.
However, shares of WisdomTree have lost 19.9%, so far this year, against the industry’s rise of 11.9%.
Currently, WisdomTree carries a Zacks Rank #3 (Hold).
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Note- 1 CDN = $0.75905
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