On November 13, 2024, Power Corporation (Ticker: POW) disclosed a strong financial performance during its Third Quarter 2024 Earnings Conference Call. The company's President and CEO Jeffrey Orr, alongside CFO Jake Lawrence, announced a 12% year-over-year increase in earnings per share for Great-West Lifeco and IGM Financial (OTC:IGIFF). Despite a decrease in adjusted net earnings from continuing operations, the company showed growth in net asset value and is optimistic about sustaining this momentum.
Key Takeaways
- Power Corporation reported a 12% increase in earnings per share for Great-West Lifeco and IGM Financial.
- Adjusted net earnings from continuing operations were $542 million, down from $1 billion the previous year.
- The adjusted net asset value per share increased post-quarter end to $61.33.
- Quarterly dividend announced at 56.25 cents per share, with ongoing share buybacks totaling over $120 million.
- Great-West Life achieved base earnings exceeding $1 billion for the sixth consecutive quarter.
- IGM Financial saw a 12% increase in earnings, driven by Wealth and Asset Management.
- The company anticipates a gain of nearly USD 200 million from the sale of Peak.
- Empower story remains strong with positive momentum in IG Wealth Management and Mackenzie.
- Industry flows are improving, with IG Wealth seeing positive net flows.
- Strategic investments in Wealthsimple and Rockefeller are performing well, with significant growth in client assets.
- Northleaf raised $1.5 billion in the quarter, contributing to a 21% compounded AUM growth since late 2020.
- GBL raised its dividend by 80%, establishing a new base of approximately €5 per share.
- Management remains optimistic about earnings and NAV growth as primary drivers of shareholder returns.
Company Outlook
- Power Corporation is confident in continuing the positive momentum into the next quarter.
- Management aims to return $1.4 billion to shareholders through dividends and buybacks in the first three quarters of the year.
- The current NAV discount presents an opportunity for value creation.
- The five-year plan reaffirms the company's growth trajectory.
Bearish Highlights
- Adjusted net earnings from continuing operations saw a decline compared to the previous year.
- Mackenzie is improving but remains in a negative flow position.
Bullish Highlights
- Earnings and NAV growth reflect successful strategies in operating businesses and alternative investments.
- Empower story highlights robust core business performance.
- Positive industry flows after previous outflows due to high inflation and interest rates.
Misses
- The company experienced some nonrecurring items that affected GBL's results.
Q&A Highlights
- Orr clarified that most Limited Partners involved with Wealthsimple are institutional investors from a 2021 Treasury offering.
- The company is actively pursuing opportunities in private credit and wealth management sectors.
- Sagard's expansion in private credit targets Canadian and U.S. markets, enhancing shareholder value.
- Orr confirmed prioritization of share buybacks for excess cash and the continuation of dividends from principal public companies.
In conclusion, Power Corporation delivered a robust financial report for the third quarter of 2024, demonstrating strong earnings growth and strategic investments. The company's leadership remains committed to enhancing shareholder value through dividends, share buybacks, and a focus on long-term growth strategies.
Full transcript - None (PWCDF) Q3 2024:
Operator: Good morning, ladies and gentlemen, and welcome to the Power Corporation Third Quarter 2024 Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] I would like to remind everyone that this call is being recorded on Wednesday, November 13, 2024. I would now like to turn the conference over to Mr. Jeffrey Orr, President and Chief Executive Officer of Power Corporation. Please go ahead, sir.
Jeffrey Orr: Thank you, operator and welcome everyone. Thanks for being with us this morning for our results call. With me is Jake Lawrence, who is EVP and CFO of Power Corporation and we'll walk through the presentation and open it up for questions. I'll just draw your attention to the cautionary statements on Pages 2 and 3 regarding forward-looking information and non-IFRS information. I won't draw your attention to Page 4 which is our mug shots, but you can admire those later at your leisure. I'm going to walk right forward to Page 7 if we could, which is overall summary of the quarter. Yes, so listen, I'm really pleased with the performance of the businesses across the portfolio of businesses in the third quarter. First of all, Great-West Lifeco and IGM, which are the producers of Power's ongoing and repeatable earnings, each enjoys strong earnings growth, 12% on an earnings per share basis for each of them year-over-year and they also contributed to strong increases in our net asset value and really great developments across the rest of the portfolio, what we sometimes refer to as the NAV part of the portfolio and a number of developments we'll talk about through the presentation, including the sale of Peak, which is a substantial step in the monetization of our standalone businesses. Progress at Sagard being recognized with a 39% increase in the value of the general partner recognized in the quarter. Wealthsimple continues to expand its client base in a very, very meaningful way in Canada and increased the depth and the breadth of the relationships it has with its clients, so big increase in the value of our stake in Wealthsimple. And it was offset with a couple of reductions in our NAV at Lumenpulse and Lion, but overall strong growth In NAV of 15% across the portfolio and that's continued at least in the public parts which are visible since the quarter end. Continued growth and strong NAV right up through till through the month of October and November, so really happy about the quarter. Excited to tell you about it. I'm going to then turn it over to Jake to walk through some of the financials in the NAV and I'll pick it up in a few minutes. Jake, over to you.
Jake Lawrence: Okay. Thanks Jeff and good morning everyone. I'll start on Slide 8. As Jeff noted, Power Corp. reflected strong results and it really came from our main operating businesses, Great-West and IGM Financial and there was there were a few noncash items which I'm going to detail in a moment. As Jeff reminded everyone, Great-West and IGM are our main earnings contributors and this quarter we're pleased to report the double digit earnings growth from both businesses. Adjusted net earnings from continuing operations were $542 million. That compared to $1 billion in the same quarter last year. I'll address the breakdown of these results on the following slide, but we'll note that both the current and comparative quarters include onetime items. On a per share basis, adjusted net earnings were $0.84 and that's compared with $1.52 in the same quarter last year. We remained active buying back shares and the year-over-year reduction in average share count contributed to approximately a $0.02 improvement in our earnings per share. We've spoken about NAV a little bit. The adjusted NAV was $57.92 per share at the end of the quarter at September 30th. That was up 15% compared to the end of Q2 and it does reflect growth both in our earnings and NAV focused businesses. As Jeff just noted a moment ago, the share price momentum in our group companies has continued post quarter end since our opcos reported results last week, both Great-West and IGM and our NAV per share as of yesterday's close was up an additional 6% to $61.33. Finally, it's worth noting this quarter the Board of Directors declared a quarterly dividend of 56.25 cents per share and this is in line with what we had declared last quarter. Turning to Slide 9 to break down the earnings, Great-West once again delivered strong base earnings of over $1 billion with both momentum and growth from each of its four segments. I would like to highlight that this marks the sixth consecutive quarter of base earnings increases at Great-West and the 12% year-over-year growth reflects the actions taken by Great-West to support and accelerate their strategies to grow both in the U.S. and in Canada. IGM Financial reported strong year-over-year earnings growth and power share of its earnings were also up 12% with increased contribution from both Wealth and Asset Management as these two segments each reported record ending average assets at the end of the period. GBL's results they do have nonrecurring items in both the current and the comparative quarter from last year. In Q3 2024, GBL's portfolio company Imerys (EPA:IMTP) disposed of certain assets and as a result recognized a noncash loss related to the reclassification of currency translation and earnings or CTA. In last year's comparative period, GBL's contribution also included a significant gain on the decomm [ph] consolidation of Webhelp following its merger with Concentrix. Moving to our alternative investment platform, Power Sustainable's results were comprised of fee related losses consistent with the prior year as well as some acquisition costs related to its newest investment strategy, as well as power share of losses on its consolidated energy assets. Sagard and Power Sustainable continue to deliver solid fundraising despite some headwinds in the alternative asset space, with year-to-date having raised a combined $1.9 billion in new commitments. This quarter we further refined our presentation by showing standalone businesses as its own line item while grouping corporate operations and other which includes charges such as our operating expenses, financing charges, depreciation, income taxes as well as our dividends on preferred shares. We believe this enhanced disclosure will help investors better see through our results. In Q3 the contribution from standalone businesses primarily included noncash impairment charges that Jeff referred to and that was both at LMPG as well as Lion. I'll note that while we expect to generate a gain of almost U.S. $200 million on the sale of Peak, this will only be reflected in our P&L upon closing, which we expect to happen next quarter. Now turning to Slide 10, here we break down the $57.92 of net asset value per share as at the end of the quarter. Our growth in NAVs and our growth in NAV per share were headlined by the strong share price performance in our publicly traded operating companies, notably Great-West and IGM. Our alternative asset investment platforms also contributed to the NAV growth this quarter as the fair value increases of both Wealthsimple and Sagard's Asset Management business led to a roughly $400 million increase in Power Corporation's net asset value. As Jeff mentioned, in addition to the announced sale of Peak this quarter, Peak also previously announced the sale of Rawlings. This generated about $83 million in proceeds which we did receive during the quarter. The proceeds from this sale are reflected in the cash and cash equivalents line and the combination of this cash, the increase in Peak's valuation and the impairments at LMPG and Lion essentially result in a flat contribution from the standalone businesses quarter over quarter. Looking a bit closer at the balance sheet, Power's cash and cash equivalents ended slightly lower at $1.4 billion as we remained active in buying back shares this quarter. We transacted over $120 million of repurchases under our NCIB program. Of this current $1.4 billion balance, approximately $1 billion is available cash when we consider dividends declared but not yet paid and I'd also note that this $1 billion does not include the approximate $440 million of proceeds from the sale of Peak that we do expect to receive in Q4. Overall, we're pleased to report NAV growth that was driven by contributions across the portfolio. I'll now turn it back over to Jeff to continue the call.
Jeffrey Orr: Okay Jake, thanks very much. So then I'll just dive in a little more on each of the pieces and on Slide 11 you've got the earnings, the last five quarterly base earnings and net earnings for Great-West Life. And I'll just point out in addition to the 12% year-over-year for the quarter year-to-date, the base earnings are up 14% from 2023 levels and that's really been led by Empower, but it is broadly based to pick up Jake's comment. If you look at it on a pretax basis, each of the four segments had earnings growth quarter over quarter from last year, but the minimum tax impacted the capital and the reinsurance segment in effect. And also there was some tax noise on the Canadian segment but all four segments were ahead from last year and continue to show strong growth. Also importantly on the return on equity, the company reported ROE on base earnings of 17.3 which is above the high end of its targeted range and so really strong growth in the efficiency of the capital and the earnings on the capital. Just a page, on Page 12 diving a little bit into Empower a bit more and this is a reprint of a slide I think that Great-West had in their presentation last week. So you may have seen it already, but just pointing out that the Empower growth story we continue and Great-West Life continues to be very confident in the thesis that we've had and in the strategy that we are engaging in. Some questions around the industry around is the D.C. industry mature and is it in outflows? And the answer to that question is the DC market is mature and it's in outflows and that's a core part of our thesis. But notwithstanding that we believe we can create and have been creating strong earnings growth through a whole number of factors that we're playing on which includes growth in market share organically, growth in market share through acquisitions. Other revenue drivers that are going on in the D.C. market as well as cost and efficiencies as you get to scale, all of those are driving profitability in the D.C. market itself and then the wealth management opportunity that is being driven by the outflows that are coming from that mature D.C. market are growing even faster, are creating even faster earnings growth in the wealth management segment of Empower. You see that in the bottom right hand. That's certainly been the experience over the past 12 months and we expect that those trends will continue well into the future. So we remain highly confident in the Empower story and are feeling really good about the performance there.
OptionTrax: Turning then on Page 14 to IGM, I think the overall story at IGM is strong performance by each of the two main core businesses in Wealth Management and Asset Management, being IG Wealth Management and Mackenzie, great momentum in terms of earnings. We've got great momentum in terms of gross sales. And importantly, the flows are turning in the business, which I'll come back to in a second and then the rest of the portfolio, the strategic investments, all four of them performing really, really well. So here on Page 14 you just see the industry flows and although IG Wealth and Mackenzie play outside of the mutual fund business, this is just put here as a -- there's good data on the mutual fund business. So it's more an indicator of what's happening more broadly in the Wealth Management market in terms of managed assets. And you see after a couple of years of big outflows driven by a number of factors, driven by high inflation, pinching, high interest rates pinching households, and then some money going in outside of managed products into cash products and certificates of deposit, you've got some of that starting to abate. And we saw in the fourth quarter or in the third quarter, excuse me, a return to positive flows and that's benefiting IG Wealth, which is back in net flows from both an AUA and an AUM basis. And Mackenzie is having improvements, but still in a negative flow position, but improvement in their net situation. But the main message on this page is that we're starting to see a turn in the industry flows. That would be a great thing, whether hopefully it continues with the environment going forward, but we saw it was an important milestone for me in the way we look at it. Page 15 just picks up on my point about the strategic investments continuing to deliver. We've got a slide later on Wealthsimple, so I'll just leave that one there, but Rockefeller showing 33% growth in its client assets through a combination of organic growth, new advisors coming on board and market. And so, both Wealthsimple and Rockefeller on the wealth management side, really strong growth. And then on the asset management side, ChinaAMC, 34% year-over-year growth in its assets, it's increased its share in a one-year basis to 6.3% from 5% of the long-term fund market. Good momentum at ChinaAMC offset somewhat by some fee declines. So the earnings aren't growing as quickly as that, but the franchise itself in a very strong position. And then Northleaf, in really a very difficult fundraising environment for alternatives, $1.5 billion of fundraising in the quarter, $4.8 billion overall. AUM has grown 21% compounded since we formed the partnership in late 2020, so great growth at Northleaf. Just on Page 16, a word on GBL. As you know, all of our companies in the past few years have come out with guidance, have been clear on their objectives. Great-West Life, IGM Power itself. Here's what we're trying to do, here's what our strategies are, here's our benchmarks. And GBL did that last week with their shareholders, going public with their goals and their strategies and gave midyear guidance. And basically the strategy is summarized in this page. They're continuing to generate cash on the left side of the page and they expect to use that on the one part for reinvestment. And as they do that, they're shifting the portfolio to more privates. And then the third element is they're also returning cash to shareholders through buybacks and through dividends. So that was articulated with some specific goals as to what they were trying to achieve. And then importantly, if you recall when we had this call last quarter, we reported that GBL had increased its dividend about 80%. I don't have the number exactly. Power's share in Canadian dollars went from what was $90 million in 2023, received in 2024, bumped by $80 million to $170 million for next year. And we were unclear as to whether that was going to be a one-time or whether Management expected that to be repeated and they clarified in their presentation last week that they expect that new higher level of dividends, which work out to about €5 per share, is the new base level. Obviously dividends, as you know, are declared by the Board. It doesn't mean there will be a dividend declared next year. But their expectation that they communicated to the market is that new 5 dollar euros is the base level and they look to grow it from there. So that was good news and we were pleased to have that in the marketplace. So when I talk about Wealthsimple and I know IGM covered this, but just continued incredible growth of Wealthsimple. They've got $2.6 million clients. They've got multiple touch points with the clients, they've expanded the breadth of their offering. It started off as a simple wealth product. How's that for turning their name around? But they've got five or six different products and they continue to broaden the number of services they provide to their clients. The AUA is up materially year-over-year and the mark on Wealthsimple was increased in the quarter by 46% at the IGM level in the way that they account. That does show up in terms of their mark. We consolidate Wealthsimple at the Power Corp level, so we don't show the increase in fair value through our P&L. And so it doesn't show up in the earnings, but it's obviously -- it's a very important mark on the growth and the success of the business. And then just on as we turn to other parts of the portfolio, as Jake mentioned, we also increased the value in Sagard and our GP interest in Sagard. And you see that's based on a number of factors, but you see the funding and the growth in the assets over the last five years on page 18. And that's really been a combination of fundraising, hiring new teams and launching new products, and also M&A and acquiring new firms, so all the tools and toolkit being used to grow the scale and the success of Sagard. And the GP itself, the manager, the value of that was increased by 39% to about $800 million. We own roughly half of Sagard. As you know we've got partners in there, Lunate Bank of Montreal, Canada Life as well as Management. So power of stake is about 50% in the business. Turning to Page 19, I think Jake went through most of Peak, so not too much to add. As I said, I think this is an important step in our continued monetization of the standalone businesses. This is a big one and a very, very good return for Power, about a three times multiple on the capital invested. We did that with our partner and so this is just generally a great success story for the group and really nice to see it and looking forward to the cash coming in in the fourth quarter. Okay then with that I am going to also make a couple of comments on Page 20. Okay then back to the asset management businesses, just a couple of words overall on the growth of the businesses. You've got on the left hand side on Page 20, the overall growth of both Sagard and Power Sustainable. Those numbers, that's funded AUM, different ways to measure the business. There's fee bearing AUM, committed AUM and then there's funded, so that's a funded basis. And we talked about the growth and the value of the GP. We also create value through the carried interest and you've got $178 million at the end of the quarter of carried interest that has been accrued for the shareholders of our GPs and again we own roughly 50% of that. A lot of that is in Sagard but some of that is in the energy infrastructure as you see and we own more of Power Sustainable. So our share of that is not 100%, but that's a value, it's a key value driver. It's great growth in the GP, growth in the carried interest. And then finally on Page 21 the other value drivers, we have about $2.5 billion of capital that are in the different strategies and overall we are expecting a return of over 10% in that capital. It's not all going to come every quarter, every year. The fixed income type strategies at the top of the page, the energy, the private credit, they tend to be in the real estate, tend to have cash flow attached to them and obviously the venture capital and the private equity have higher targeted returns, but the returns are episodic. They come as our monetization, so they're not steady cash. But overall we are looking for earnings and value growth through this part of the strategy as well. All right, Page 22 is our continued quest to return capital to shareholders. Jake mentioned it. You've got $1.4 billion returned over the first three quarters including dividends and buybacks. And I think JQ did a nice job of going through the cash position. So I won't go through the second point on the page. And both SP and DBRS reaffirmed our strong credit ratings over the last several weeks. Page 22 is just a look at our total shareholder returns on a one-year, three-year and five-year basis compared to a couple of the benchmarks that we follow and I won't belabor that point. Page 24 is just a tracking of our NAV discount and we're around 23%, 24% right now and so we continue to view that as an opportunity for value creation and we follow it. We don't influence it directly, we influence it indirectly. But the discount, the strong share growth is there, notwithstanding that, there's still an opportunity on the discount. And I'm going to finish up on Page 25, just to say we're very optimistic that the tenets of our value creation strategy remain very much in place. The returns that you saw over the last five years a couple of slides further or earlier, I should say, have really been based on earnings growth and on NAV growth. They haven't been based upon any material changes in the valuation. So the TSR story that has been created is notwithstanding that the PE multiples of Great-West Life and IGM really haven't changed over the period. When you look at where they're trading and you look at the fact that both Great-West Life and IGM have given guidance of 8% to 10% growth in earnings per share and you compare that to where earnings per share are and where the stock prices are, you're going to see the multiples are pretty reasonable, very reasonable and haven't really changed at either company. Our discount hasn't changed too much. So the story of the returns we produced are not because of a reevaluation of Power Corp or our subs. It's through earnings growth and NAV growth and the components of our strategy that we put in place five years ago remain, in fact have been validated and we continue growing, and have continued to grow in our confidence and so we can execute on the strategy and we're looking forward to doing so. So with that, I'm going to close the comments and open it up operator to participants on the line who want to ask questions.
Operator: [Operator Instructions] And our first question will come from Nik Priebe of CIBC (TSX:CM) Capital Markets. Please go ahead.
Nik Priebe: Okay, thanks. Just in light of the Wealthsimple markup, I wanted to ask about the ownership dynamics. So the Power Group controls a large economic interest, but there are also third party LPs that would participate through the Portage Venture Capital platform and they've done very well in that investment. Do those LPs want to see an exit to crystallize returns, or how mature would that investment be relative to the targeted hold period for that fund? I'm just wondering how those dynamics might inform or influence the timing of a potential public listing or other exit event.
Jeffrey Orr: Thanks, Nick, for your question and it's a good question. Just as a point of clarification, Most of the LPs that came into Wealthsimple are not through Portage. The interest of our group is through Portage. But most of those investors came in, I think it was 2021 in a Treasury offering as well as a secondary, that Power Corp and IGM participated. There was a lot of demand and we, as you know, we sold some of our position at that point. So those are institutional investors, VCs, whose list of really tech players and fintech players around the world. And as you can imagine, they've invested into a private company and they will have abilities to have liquidity going down in the future. That’s you're asking about timing. I don't have a good view on timing at this point. I don't sit in their seats and I don't have the shareholders agreement in front of me. But they did come in, I think it was, in 2021, the valuation at that point. That was right as fintech valuations were peaking and they came in at a $5 billion valuation. If you followed the story, fintech values came off quite dramatically in 2022 and the positions of Power and IGM were marked down and now we've marked them up several times and we're back to the $5 billion valuation. So one way to think of it is when you think about when would they. I'm now getting into the heads of the investors, which I probably shouldn't do, but I just point out that the value that we just marked it back to is equivalent to the value that they came in at three years ago. So I can maybe that helps inform how they might be thinking about it. But eventually there'll be liquidity discussions in the future and we'll need to deal with them at that time. Not sure I can be more specific and I hope that answered your question.
Nik Priebe: So that's actually very helpful. And then just switching to the Asset Manager, I want to touch on a pair of themes in the alt space more broadly. So a number of alts players are talking about the prospect of an improving demand environment for private market capabilities because of this easing denominator effect, better rate stability, better capital return, that would be a benefit to your platform. But a lot of the larger alts players have also been highlighting how LPs want to consolidate the number of GP relationships they have with a narrower focus on large platforms with broad capabilities. I just wanted to get your take on that and what you're hearing in your dialogue with LPs as it relates to those themes.
Jeffrey Orr: Those are both themes that we would agree with. The easing rate environment, growing confidence in markets, all of that, there's an expectation is going to play into a more active M&A market, more liquidations for PE players, which then will put to work also some of the funds that they've raised and that will kind of unlock some of the hopefully future fundraising, but also realizations. So that's starting to play out and it's hoped for, but we'll see how that plays out. I would expect it would be with the enthusiasm in the market and the economy right now, but we'll see how it plays out. On your second point, that is definitely a theme. You've got consolidation going on around the major players, so the very large alt players are well positioned for that. You know, the top five, I think, are getting something like 50% of the funding. I'm not exactly sure what that period is, but I've seen that figure quoted a number of times. There are hundreds, if not thousands of alt players. It doesn't mean they're all disappearing. It doesn't mean that you got to be. If you're a smaller player, you've got to have a very attractive lineup of funds and you've got to have good returns and you've got to position yourself with your LPs in a way that you're bringing value added to them. And we could walk through ours as to why we think we have differentiated strategies. We do have very good returns, we have very good products, we've got differentiated products, but there's no question that there's some consolidation that's happening in the industry as to where funds are going. We're well aware of that. So I'm not sure I can again add much More than that, that is for sure a force going on in the market. Anything Jake?
Jake Lawrence: Yes, just Nick, what I'd add on to that second point is it's part of using Sagard as the example. In the past 12 months roughly they've wanted to add in capabilities to become more of that one stop shop. So in addition to their core products, they added in the capabilities of performance equity management around retail funds to fund some secondaries. And they've also added in some capabilities in the collateralized loan obligation space or CLOs with HalseyPoint. And so that's complementary to existing credit fixed income real estate products and broadens out the product set at the same time it brings in from those acquisitions customers and GPs and allocators they hadn't dealt with before to now cross sell some of the more historical Sagard products into. So we definitely see that theme and we're trying to act on it as well strategically.
Jeffrey Orr: Thanks, Jake.
Nik Priebe: Okay, thanks for that. I'll pass the line.
Jeffrey Orr: Yes, thanks Nik.
Operator: The next question comes from Graham Ryding of TD Securities. Please go ahead.
Graham Ryding: Good morning. Maybe we'll stick on the alternatives theme. Just within Sagard, I believe you recently opened up your private credit fund, sort of the retail wealth channel. So maybe just some color on how exactly are you going about that? Are you targeting both Canadian and U.S. channels and then just, how much of a priority is that broadly for your alternatives platform? What strategies would maybe make sense and how do you go about that process?
Jeffrey Orr: Yes, on your, on the broader question the group has been pursuing in the alts space, bringing alts to different markets, bringing it to the wealth markets, bringing it to ultimately the retail markets. The partnership in fact with Northleaf that IGM struck going back to 2020 was all about that and so that's showing up in various ways across our platform. And I could talk some more about that, but the alts are finding their way into individual products through multi asset products, through defined contribution channels, through retail channels, through individual funds. And so that is broadly a theme and it's an important theme and all the alts players are on it. The institutional market and the family office market were the main players in alts going back over the last 15, 20 years. They've got quite full allocations. The drop in at one point or the increase in the fixed income or excuse me, the decrease in the fixed income market on a lot of those allocators when interest rates went up, in fact found them to be over allocated because all of a sudden fixed income assets were basically the change in the asset allocation is just through markets. So that exacerbated it. And where the flows are coming in the future are going to be increasingly in retail wealth management channels. So that's broad theme and our group has been active across the board. And private credit is simply one example of that. Private credit is finding its way into products. Wealthsimple has got some retail products that have different forms of retail products. Some of it's in that channel. But they're also going across our channels looking for distribution opportunities. And by the way, not uniquely our distribution channels will look to where we have ownership in the asset management space, be it in Sagard or Power Sustainable Capital or Northleaf or our partnership with Franklin Templeton, for example. But also, of course, look more broadly than that. It's not just uniquely products that we're producing. So it's a big topic, very big topic.
Graham Ryding: Okay, so -- yes, just to sort of maybe summarize a little bit for Sagard and Northleaf, it sounds like you are looking to leverage your channels through IG Wealth. Wealthsimple and Rockefeller, is that a channel that has potential to be leveraged as well?
Jeffrey Orr: Rockefeller, Empower, there's lots of channels here. We've got, Great-West itself got three. Well, across the group, we'd be over $3.5 trillion of assets on the platforms. Right. So there's lots of distribution and that's not counting when we wholesale onto others people's products, the people's channels. So it's across the board. We have our teams working to look for distribution opportunities and the platforms, the distribution platforms are looking for differentiated product and obviously the asset managers are looking for distribution.
Graham Ryding: Okay, great. We don't often talk about GBL, but you did touch on it in your presentation with the strategic update last week provided by GBL. What are your thoughts? Is this the right strategy to get shareholder return moving in the right direction for this asset?
Jeffrey Orr: So I think the answer to that question is yes. GBL has been on a strategy for a few years of returning capital to shareholders, effectively reducing, not abandoning, but reducing their exposure to public markets and going more into private assets where they think they can get greater value creation and recognition. And in the meantime, not taking all of the cash you're liquidating, but returning some of that cash to shareholders that's been through buybacks, given their NAV discount. That's been a smart strategy. We haven't participated. Neither we nor the fair family have participated in that. But now they're turning with the cash they're generating to increase dividends, which is I think a great thing for us. So we'll receive more cash from that. So overall I think their strategy is good for value creation, hopefully value recognition and over time recognizing and narrowing the discount and then in producing more cash for power. I think it's all in the right direction. So that's answer your question is, yes.
Graham Ryding: Okay, that's it for me. Thank you.
Jeffrey Orr: Okay, thank you.
Jake Lawrence: Thanks, Graham.
Operator: The next question comes from Jaeme Gloyn of National Bank Financial. Please go ahead.
Jaeme Gloyn: Yes, thanks. I was hoping you could just provide a bit more color on the increase in the Sagard fair value and the drivers of that?
Jeffrey Orr: Yes, so the drivers that are increased, they're multiple increased assets under management, strong performance in the funds, increased breadth, launch of second funds in each of the strategies. It gets a little technical when you get into trying to value or when one is valuing an alternative asset manager. When you have a fund that is a first vintage, you have one discount rate. As you have success in that fund and you launch a second product, evaluators in the space will then drop the discount rate because you've now proven that the product has been successful. Your investors have had a good experience, they rolled into a second fund and now you don't have a first fund. You have a franchise, if I can use the word loosely in that area. And so an increasing portion of Sagard’s funds are onto their second vintage and the discount rates have come down. So you've got a combination of growth in assets, growth in revenue, good performance and more maturity of the strategies in place and lower discount rates and that all turns into a valuation, a higher mark on the valuation. I think you want to add Jake?
Jake Lawrence: So they've added in the more capabilities I referred to earlier. So the last time evaluation was done, the performance equity management and HalseyPoint interests weren't in there. So that's, that's also increased the value of the entity.
Jeffrey Orr: So those are the main drivers. Yes.
Jaeme Gloyn: Thank you. Sorry, did you want to add something?
Jeffrey Orr: No, I didn't. No, go ahead, Jaeme.
Jaeme Gloyn: Oh, okay. I was just going to ask about the capital deployment and sitting on excess cash of call it $600 million above your base cash holding levels as you continue to do more buybacks. Maybe talk through the dividend as well. Looks like it was on hold this quarter, and how you're balancing those two uses of capital.
Jeffrey Orr: Okay, great. Good question. Thank you. So, no change in our approach to share buybacks. That's going to remain the priority with our excess cash. As you know, the receipt of cash can be a little sporadic. And so we don't necessarily get a bunch of cash in and go and kind of spend it all in one quarter. We try and be a little more systematic about it than that so that we can be in the market on a more continual basis. So that's the way we look at buybacks and no change in our approach to buybacks. We just have a lot receipt of a lot of cash here in this particular period. Your question about the other key component of returning capital to shareholders is through dividends. And on that we really flow through the dividends that we receive from our three principal public companies. So the way we think of our dividends that we pay out, we pay out dividends from what we consider to be consistent sources of inflows, not from the inconsistent sources of inflows like we monetize peak or we have a realization on one of our private equity positions. So the way to think about that is, we take our Great-West Life dividends, our IGM dividends and our GBL dividends. We deduct our operating costs and financing costs and that's a flow through of those dividends. Because the last time that we, we haven't had a dividend increase that's come through in cash, the last time that was when Great-West increased its dividend that they announced back in February and so that was an increase in the dividends received. And that resulted in these when they announced that February and March we announced an increase in our dividends, flowing that anticipating receipt and flowing it through. And I don't see any change in that. So that's a long way of saying, we've got our dividends will increase when we receive higher dividends from those three subs. Hope that's clear. I don't know if that answered your question?
Jaeme Gloyn: Yep, that's perfect. Thank you.
Jaeme Gloyn: Okay, thank you. Operator, I don't see any other names on the question list at this point.
Operator: Yes, we have no further questions at this time. So I'll turn the conference back over to Mr. Jeffrey Orr for any closing remarks.
Jeffrey Orr: Okay, thank you. So again, thank you. I am really excited about the quarter, and lots of momentum building in the businesses. And with that, I'm going to thank everybody for participating in the call. We look forward to speaking to many of you in the weeks and months ahead. Thanks everyone. Operator, that's it.
Operator: Ladies and gentlemen, this concludes your conference call for today. Thank you for participating. And you may now disconnect your lines.
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