Great-West Lifeco Inc. will shell out more than US$800 million to buy U.S. investment manager Personal Capital — and its chief executive hinted the company is prepared to dip into its coffers again if other promising deals come along.
Great-West subsidiary Empower Retirement said Monday that it will pay US$825 million for the hybrid wealth manager that combines a digital experience with personalized advice delivered by people. It could spend up to US$175 million more, if specific target growth objectives are met.
President and chief executive Paul Mahon said the deal with the Colorado-based business is helpful for customers who have a range of assets spread out across banks and brokerages, but want to make decisions around budgeting, buying a house or saving for retirement.
Great-West advisors would meet those clients face-to-face to share advice, he said.
“But mass affluent Americans or mass affluent Canadians that are on retirement savings plans like in group RRSPs here in Canada or our 401k plan in the U.S. very often won’t have access to that level of advice or guidance,” Mahon said.
“What this acquisition does is it couples, for someone who has their retirement savings, with full suite of advice and guidance, allowing them to make better financial decisions.”
Great-West had its eye on Personal Capital for many years, so when the company came on the market in recent months, it knew it had to jump, he said.
“The times are a bit unsettled with Covid-19, but we looked at this as a strategic play and we have a strong capital position,” Mahon added.
IGM Financial Inc., a sister company to Great-West which holds a stake in Personal Capital, expects US$176.6 million in proceeds from the deal, plus up to an additional $24.6 million in possible additional payments.
The transaction is expected to close in the second half of 2020, subject to required regulatory approvals.
It may not be the only deal Great-West goes after during the pandemic, said Mahon.
The company is looking for opportunities in Europe and chances to acquire other 401k record-keeping platforms in the U.S., so it can scale.
“We have not put tools down,” Mahon said.
“We remain active in the market looking for other opportunities to deploy capital strategically.”