I just read piece about CIX in the Globe here: https://www.theglobeandmail.com/business/article-ci-financial-us-expansion-leave-canada/ .
It is a far from flattering description of CIX (says the CEO is overpaid, and the CEO overpaid for the US businesses, too much debt).
I have a couple of questions.
1) The article said that the CI will delist from the NYSE and be listed only on the TSE,
This seems like a bad development. What do you think?
2) Also, there is the talk about the IPO. Well, what does that exactly mean for share holders (ideally)? Would the IPO lead to a pop in CI's share price?
3) Would it end up being a dilutive transaction?
Maybe I am being pessimistic, but the outlook for CI seems...unprofitable...and I fear the worst (permanent loss of capital).
1. Traditionally, the US markets have increased liquidity for companies that are also listed on the Canadian exchange, and so we would consider this to be a net negative development for the company.
2. The company indicated its US IPO is still in the works, as an effort to raise money, reduce debt and separate its Canadian and US businesses. It is looking to continue growing its wealth management business organically, and we would expect any US IPO by the company might help to support shares, but it is too early to tell.
3. The company hasn't decided how many shares to sell or at what price. We would not expect this to be a dilutive transaction as it is spinning out existing shares that it holds.
Future funding may become more challenging for the company following its rating downgrade by S&P Global Ratings to a 'junk' rating. Momentum has certainly been negative, and the company asking S&P to stop rating its debt is not a great sign. The IPO may lead to some positive developments for the company, but for now, it is in a wait-and-see approach.