Power Corp Highlights Wealthsimple, AI and Buybacks as Next Growth Drivers

Key Points

• Power Corp has completed its simplification into a financial-services-focused holding company, with Great-West, IGM Financial, Wealthsimple and alternative-asset platforms positioned as key growth drivers.
• Wealthsimple has become a core investment: Power and IGM together hold about 45% of its equity and 55% of voting rights, while the fintech has surpassed C$150 billion in assets under management and reported C$17 billion in recent net flows.
• Share buybacks remain a priority while Power trades at a discount to net asset value. The company has repurchased roughly C$4 billion of shares over five years and had approximately C$1.7 billion–C$1.8 billion in available cash.

Power Co. of Canada TSE: POW has completed its planned simplification into an international financial-services holding company and is positioning its operating businesses, strategic investments and alternative-asset platforms as its next sources of value creation, a company executive said at a CIBC conference in Montreal.

Speaking with CIBC analyst Scott Fletcher, the Power Corp executive, identified during the discussion as Jake, said the company’s reorganization beginning in 2019 established a focus on financial services and included the sale of non-core standalone holdings. The announced sale of Lumenpulse Group marked the final disposition in that process, according to the discussion.

Proceeds from sales of net-asset-value-based businesses have been used for share repurchases or reinvestment in growth-oriented financial-services operations, the executive said. He pointed to the repositioning of IGM Financial and Great-West, investment in Wealthsimple, and the scaling of alternative-investment platforms as key elements of the strategy.

Operating Businesses and Strategic Investments

The executive said IGM Financial has evolved beyond its traditional association with Mackenzie Investments into a broader wealth-management platform. While the business has fewer clients and advisors than five years ago, it has increased assets by using financial planning to deepen client relationships and expand share of wallet, he said.

He highlighted Mackenzie’s investment performance, including its quantitative products, as well as a return to retail inflows and several quarters of positive net inflows including institutional business. IGM’s holdings in ChinaAMC and Northleaf were also described as performing as expected.

Rockefeller, the U.S. ultra-high-net-worth platform in which IGM owns just under 20%, was cited as a long-term growth investment. The executive said a recapitalization at the end of last year nearly doubled IGM’s valuation mark over roughly two and a half years. He said IGM could seek to increase its ownership over time, but characterized the investment as a long-term holding rather than a transaction intended for resale.

At Great-West, the executive said U.S. retirement business Empower has been a significant contributor to earnings growth, delivering double-digit growth over an extended period. Great-West has reported earnings above C$1 billion for several consecutive quarters and return on equity above 19% for two or three quarters, he said.

Great-West’s year-to-date earnings were about 90% cash-generative, according to the executive. The company has added a U.S. defined-benefit capability through its acquisition of Milliman’s defined-benefit business, increased its dividend by more than 10%, and plans to repurchase more than C$1 billion of shares, he said.

Active Ownership and AI Collaboration

Power Corp’s role extends beyond capital allocation, the executive said, describing the company’s approach as “active ownership.” He said Power is involved in strategy, capital allocation, major risk matters and leadership decisions at portfolio companies, while operating management teams retain responsibility for day-to-day execution.

He cited Power’s board involvement at Irish Life, Canada Life UK, Wealthsimple and Great-West as examples. He also said the company has helped create collaboration among portfolio businesses, including IGM’s investments and partnerships involving Wealthsimple, nesto, PolicyBook and ClearEstate.

One recent example is a C$150 million artificial-intelligence investment fund led by Sagard’s AI team. Power Corp, IGM and Great-West each committed C$50 million. The executive said the fund will focus on investments relevant to financial services and could identify tools that can be deployed across the group’s advisor networks and operations.

“You do not have to build five times and deploy five times,” he said, referring to potential AI applications shared across businesses and geographies.

The executive said Power closed the prior day at a 20.1% discount to net asset value. More than 90% of its NAV is publicly traded, principally through Great-West, IGM and GBL, while about 4% is cash, he said. He said Power needs to better communicate the practical benefits of active ownership to investors.

Wealthsimple and Capital Allocation

Wealthsimple has become a core long-term investment for Power, the executive said. Power and IGM together control about 55% of the voting economics and 45% of the equity stack in the fintech company. The group initially invested about C$300 million, and its economics in the company have grown to more than C$4 billion, he said.

The companies also participated in Wealthsimple’s capital raise last year with approximately C$200 million. The executive said the group has sold a limited portion of its position to bring in investors that could contribute through participation and board representation, rather than because it viewed Wealthsimple as overvalued.

Wealthsimple reported C$17 billion of net flows in the prior quarter across deposits, investments and digital assets, according to the executive. He said the company had more than C$150 billion of assets under management and that more than one in 10 Canadians has a Wealthsimple product.

On capital allocation, the executive said Power has multiple options, including supporting operating-company growth, investing in newer initiatives such as the AI fund, and funding Sagard and Power Sustainable. However, he described repurchases as a particularly compelling use of capital while Power trades at a discount to NAV.

Power has repurchased roughly C$4 billion of its own shares over the last five years, he said. The company had approximately C$1.7 billion to C$1.8 billion of available cash, with more than C$1 billion generated from participation in Great-West buybacks during 2025 and 2026.

Alternative Platforms and Financial Flexibility

Sagard has generated an internal rate of return above 15% on Power’s seed investments, the executive said. Power has committed more than C$1 billion of seed capital, while the value of its general-partner interest has increased from about US$75 million at the initial investment to roughly US$400 million.

Sagard currently manages about US$50 billion and aims to scale to C$200 billion over the next five years, he said. Investors should increasingly monitor fee-related earnings as an indicator of the platform’s progress, he added.

Power Sustainable, which invests in sustainable energy and food through private equity, infrastructure and credit strategies, is moving several strategies from first funds to second funds. The platform has stated an intention to mobilize C$10 billion of capital in Canada over five years for projects including infrastructure and sustainable middle-market strategies.

Looking ahead, the executive emphasized the company’s financial flexibility, citing C$60 billion of gross asset value, C$900 million of debt, an earliest debt maturity in 2033, and 2% leverage on a deconsolidated basis. He said the company sees momentum at Great-West and IGM, alongside optionality for both organic and inorganic growth initiatives.

About Power Co. of Canada (TSE:POW)

Power Corporation is an international management and holding company that focuses on financial services in North America, Europe and Asia. Its core holdings are leading insurance, retirement, wealth management and investment businesses, including a portfolio of alternative asset investment platforms.

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