PWCDF - Power Corporation of Canada (PWCDF) Q1 2023 Earnings Call Transcript
2023-05-16 11:44:02 ET
Power Corporation of Canada (PWCDF)
Q1 2023 Earnings Conference Call
May 16, 2023 8:30 a.m. ET
Company Participants
Jeffrey Orr - President and Chief Executive Officer
Greg Tretiak - Chief Financial Officer
Conference Call Participants
Geoff Kwan - RBC Capital Markets
Jaeme Gloyn - National Bank Financial
Doug Young - Desjardins Capital Markets
Graham Ryding - TD Securities
Tom MacKinnon - BMO Capital Markets
Presentation
Operator
Good morning, ladies and gentlemen, and welcome to the Power Corporation Q1 2023 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for a question. [Operator Instructions] I would like to remind everyone that this call is being recorded on Tuesday, May 16, 2023.
I would 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. Thanks for joining us this morning for our first quarter results call. I would draw your attention on page two, to the cautionary statement regarding forward-looking statements and non-IFRS disclosure measures.
With me this morning is Greg Tretiak, who is the Chief Financial Officer of Power Corporation, and together we'll make the presentation, and then be pleased to answer your questions.
I will just highlight page six, as I normally do, to call your attention to various public disclosure events and documents for our group companies that you can reference that have come out over the last several weeks.
And with that, I will turn to page seven. First comment on our earnings, and really we focus our earnings on Great-West Lifeco and IGM, which are the two main sources. They are the sources of our recurring earnings. And it was a strong result in what is pretty difficult market conditions. Great-West Life, of course the big highlight is that they and their other competitors in the insurance industry released earnings under IFRS 17, so a very significant change. Greg will spend just a quick few moments on that today, although the Great-West Life disclosure is much more extensive on the topic, obviously.
But Great-West Life had strong earnings in the quarter. And IGM, at $207 million of adjusted net earnings, just down a snick from the same quarter in '22 despite significantly lower markets, we thought was a very strong result. And net earnings, of course, were affected by the transaction that we did with CMAC and the gain they recognized with respect to that. So, we ourselves look at the adjusted net earnings number as the one which is more indicative of underlying earnings levels. And then a lot of things happened in the quarter. We've been awfully busy. Great-West Life announced the acquisition of IPC from IGM. We'll give our perspectives on that in this call. And then IGM announced the acquisition of a 20%-plus interest in Rockefeller, make some comments about that.
GBL reported a good growth in its net asset value. And really quite an interesting transaction on Webhelp, which we will talk about, not just in terms of the value that was created, but I think it's quite illustrative of some of the earnings challenges that exist in looking at that part of our portfolio from an earnings point of view, as opposed to from a value creation point of view. And the platforms, in a difficult environment, raised just under $400 million during quarter. So, we'll touch on those points as we go through the presentation.
Page eight is just a reminder, it's a difficult reminder. The bottom left-hand, the S&P had its worst year, since the financial crisis, its fourth worst on record. And then that coincided with the Bloomberg Barclays Bond Index having its worst performance on record. So, this was a difficult year for investors and for companies that serve investors and earn a lot of their revenue from market levels. And then that, of course, on the right-hand side has resulted in investors not putting a lot money at work in markets, money is flowing into CDs and other type products as you've seen. And this is a Canadian example, but it's true across of diverse geographies where we operate.
Greg, I'd ask you to pick it up on the earnings and the NAV over the next few slides.
Greg Tretiak
Okay, thanks, Jeff. So, I'm on page nine. And looking at adjusted earnings, $514 million in the quarter, which is up 16% over last year, $0.77 per share, which is [18.5] (ph) over last year. The NAV, nice increases over the quarter, and we have more on that in a subsequent slide, so I won't spend any time there. And, of course, we declared a quarterly dividend of $0.525.
And take you over to page 10, I'm not going to give you an accounting class today, I'm sure you've heard a lot about IFRS 9 and 17 for all those who follow the insurance industry. But just a few points, if we could. So, with Great-West Lifeco, they adopted 17 and 9, and that affects about a third of their business, and a lot of work for that reporting effort in the quarter, obviously. And one of the things that is apparent, I think, across the industry is that the net earnings volatility, given the de-linking of assets and liability under the standards, standard 17 in particular, is expected to continue to give net earnings volatility. And so, I'm sure you've seen that, and you can witness it in the quarters, certainly in Lifeco's results, and others.
At Great-West Life, I think one of the most important changes in terms of management's presentation has been the addition of the value drivers, Workplace Solutions, Wealth & Asset Management, and Insurance & Risk Solutions. I think breaking down the information in this way and presenting the information this way would give us a lot more insights and new insights into the nature of the business and how it's performing in addition to their geographic segmentation. With respect to Power Corp, I should start with GBL. GBL adopted IFRS 9 back in 2018, when you had to first adopt that standard.
At that time, PCC preferred to wait until Great-West Life, one of its major subs, obviously, to change its accounting. And so, we were under 39 and we moved to 9. And that reconciliation, if you will, presented a fair amount of noise in our results over the last several years. And we adopted GBL's accounting standard, which is IFRS 9 in this quarter. So, going forward, that's one less moving part that you'll see in our numbers, which is a good thing. And then on Power Sustainable China, this portfolio basically is held for capital appreciation. And we look to, obviously, the changes in NAVs, over time, for this particular portfolio, and we have classified it as fair value through OCI.
All the rest of our investments are basically fair value through the P&L. And there is a slide in the appendix that helps you navigate our selection of accounting standards through the quarter. Sorry for the longwinded explanation of the changes for accounting in the quarter, but I promise not to do it in the future.
Jeffrey Orr
Well, it's equity. Operator, why don't we stop, anybody on the line, Greg.
Greg Tretiak
To page 11, adjusted net earnings, you can see that Great-West Life and IGM combined delivered $663 million versus $600 in Q1 of last year, up 11%, so good showing. Jeff's already spoken to the strength of both Great-West Life and IGM's results in the quarter. Looking at GBL, you see that it was up over last year. There is a slide in there, or I should say a section in the MD&A, page 39, which I think breaks out nicely their earnings. You'll see the cash dividends were up in the quarter, and that's one of the things that we keep any eye on when we're looking at their earnings.
Sagard and Power Sustainable had minus $88 million in terms of a contribution largely driven by the two items you can see in the left-hand panel. One is the snow cover during the year was more than normal, and operating results on our energy infrastructure was down $30 million in the quarter. The second one is the $33 million on the revaluation of the NCI liabilities. You saw that in the last quarter, and last couple of quarters actually. And we expect to see that in the future as well. We have a number of assets that we are basically bringing to completion. I think we've got about, in total, capital on energy projects in the West about $350 million of projects that have yet to come on stream and go COD.
And as they go through that process there will be revaluations throughout the coming quarters. And so, we'll expect to see those NCI charges in the future quarters as well as those projects are basically coming to completion and on-stream, and then transferred into the fund. One of the things we will do in the quarter -- this coming quarter is reach out to you and give you a little more transparency on how we anticipate that number to unfold as we go through the coming quarters. Other than that, I think I don't have anything more on that page, and I'd just go to the next page, which is the net asset values.
You can see that we're at $46.89, which is up 11.9% over December. That's driven on the back of Great-West Life, and IGM, and GBL. And you can see, in the table, that 85% of the portfolio is basically in those operating companies that are publicly traded. And then, when you look at the May 15 net asset value, we're up another 4.4%.
So, with that, Jeff, I turn it back to you.
Jeffrey Orr
Okay, thank you, Greg. Okay, I'm going to then spend a few pages on some of the transactions that we announced during the quarter and share our perspectives with you. The first is on page 13, and it's Canada Life's acquisition of Investment Planning Council from IGM. I think this is going to prove to be a very smart move for Canada Life as we look back on it a few years from now. It does a number of things for them.
It really positions them by giving them the tools and the scale to build a leading wealth management platform for their advisors and clients. And with $85 billion now that they have between Quadrus between their seg fund shelf, which is very much like an investment shelf with insurance wrap and then now with the scale that they have and the tools from IPC, they will and are capable of building one of the leading wealth management platforms for advisors away from the non-bank advisors in Canada.
So, this is I think a very, very strategic transaction that's going to help them grow their wealth management presence. They have got a strong insurance offering, got a strong group business. This kind of leaps frog them forward with tools to build a very competitive wealth offering that we think will play out well for their growth going forward in Canada.
I want to draw an analogy to this and what we have done at McKenzie over the last few years. We've talked in our strategy about simplifying our Power Corp and our structures and how we own assets. But another thing that's going on is we have actually looked across our group where we have -- where we can benefit from greater scale and create stronger businesses. And an example that will be analogous is that McKenzie, if you go back over the last several years, not only have rebuilt McKenzie into a very strong competitors to all the investments and changes that have been made in the investment area and the distribution area, but we gave it scale by in the first instance transferring IG investment management and all their assets over to McKenzie.
And then, we followed that up with Canada Life as you'll recall a few years ago selling GLC to McKenzie and concentrated McKenzie with a much bigger asset base to be a more formidable competitor in the asset management business in Canada with scale. And we are doing the same thing here. I view that it is quite analogous is that if you look at IGM already has a very strong presence in the Canadian wealth management business. Canada Life here is able to take what they have, add IPC to it and build a much more competitive wealth manager in going forward for them. So, just some comments on that, I am not sure it got -- I don't know how much attention it got from the marketplace. I think this is a really important move for Canada Life and for our group.
Now I am going to move to page 14. Really excited about this opportunity and what IGM has done in buying 25.5% interest in Rockefeller. First of all, this is an iconic brand. I don't know if there is a better brand in wealth management in high net worth and ultra high net worth in the world. I just can't imagine one. And Rockefeller is a business that has been built by Greg Fleming and his incredible leadership team starting five years ago. And they took the family office business of Rockefeller and then they built the advisory business around it. And we have known Greg and worked closely with Greg for eight or nine years after he left President at Morgan Stanley. I think it was eight or nine years ago. He has been a very close advisor to us.
And so, we got close to him and got to know his management team and had the opportunity to make this investment. I think they have a differentiated position in the U.S. wealth management market. As I said, it's got a unique positioning with a family office at the core and then a very high end advisor business they are creating one from. All of the teams that they recruit come into Rockefeller. They are all on the same platform.
Day one when they join, it is one company, one culture, one set of systems. A very high end curated product shelf. And the final point is that while they are growing through having advisors join the platform, the advisors that join are at a stage in their career where they are very interested in growth. This is not providing a ticket for advisors to retire. This is advisors that are in high growth mode. The compensation system motivates them highly for growth.
So, Rockefeller has a lot of organic growth in addition to the advisors they are recruiting. So, that's as I said we are very very excited about it. It's a risk smart way for IGM to get into the U.S. market with people we know in a model we are comfortable with. And I will then broaden this out and just kind of draw the length back a bit on what IGM has done. So, I look at IGM right now, I think you are well aware of all the changes that have been done at IG Wealth in Canada, starting with Jeff Carney and then Damon and their team.
You're aware of how we have strengthened Mackenzie. So, IGM's now got two very, very strong engines in wealth and asset management in Canada. And you couple that now with a very high growth engine in the U.S. market and by putting the CMAC stake, which we did in the first closed in the first quarter, IGM's got these two strong engines of growth in Canada and then two vehicles for growth in the two biggest markets in the world, the United States and China. And so, really, you go back over the last five, six years, we've transformed IGM here into a different company than what it was and very excited about this deal, obviously.
Okay, Webhelp, this is as close as I'm going to get to an accounting lesson when you'll ever hear me on these talks. But Webhelp is really illustrative of some of the two parts of Power Corp and how we look at them from a value point of view. And it's also a great deal for GBL and validation of many of the great things that they're doing. So, as you know, Great-West Lifeco and IGM, I think it's up to about 78% of our gross asset value now that we have purchased the additional Great-West Life shares from IGM. And that 78% is the source of our recurring earnings. The rest of it is GBL, the platforms, the standalone businesses. And we don't look at earnings as the measure as to how those businesses are doing because their investment positions, some of them are early stage.
They go up and down in value over time. Obviously, we are thinking that they're going up in value, and they have. But they go up and down with marks. And then we have a number of businesses where we consolidate them. And we have minority positions. And as they go up in value, we actually recognize the increase in the value of the minority interest, but we don't recognize the increase in the value in our position. And there's no better example than that than Webhelp.
So, I'll turn to this slide. Webhelp, GBL announced a transaction to merge Webhelp and create a value for themselves of €1.5 billion. This was an investment they made in 2019, and it's 1.8x multiple on their invested capital. Through the piece as the value of Webhelp has been going up. As I said, GBL has not recognized those increases. But if you go to the bottom of the page, they have recognized €1.3 billion of cumulative losses that are associated with the increase in the value. So, here we have something where it's been an unbelievable investment, great IRRs, and the way the accounting works is they've got $1.3 billion in losses to show for it.
When the transaction closes, that $1.3 billion will reverse, and the gain will be recognized on the transaction at whatever the value of they're taking shares or whatever the value of the shares are at that time. So, great deal, validation of their value creation strategy, and also a great illustration as to why we don't look to the earnings that come from GBL or from the Power Corp assets as our benchmarks for how they're doing. We do that with Great-West Life and IGM, but not that 22% of our portfolio. Okay, I'm going to turn some comments then to the platforms.
Page 16, really difficult fundraising environment, but there was still just under $400 million of fundraising that was done in the first quarter. That was through a European fund that Sagard completed. And also Sagard completed a senior lending fund in their private credit business, which is a new product for them. In addition, Power Sustainable Capital announced during the quarter, the launching of two credit funds. So, this is a new product for them, it's Infrastructure Credit and they announced a global Infrastructure Credit Fund with a team in the U.S. and a U.K. fund with a team in the U.K.
So, no fundraising there yet, but they've announced the hiring of teams and the launch of two new products. So, good progress, and I would show you if you go down to the bottom left on page 16 under the funded there you see Power's Capital is now $2.4 billion of the $15.8 billion that has been raised as Power itself.
Canada Life has some money in their platforms as well. But Power Corp is 2.4. That's about the same as what it was two, three years ago, even though that funded number has grown, I think about fourfold over the last three years. And Power Corp's investment has stayed the same. So, when we talked about growing these platforms and not using our balance sheet but this is a perfect illustration of it.
And with that, I'll turn over to page 17. When we look at the first thing, we're looking at in building the alternative investment platforms is the fee related earnings. So, on the bottom left you've got the fee related earnings of Sagard and of Power Sustainable Capital. You see good growth in revenue at Sagard and still slight losses at fee related earnings. So, they have built up their platform. There's a number of things happening there in terms of building up of staff. There's a little bit of a catch-up fee in Q1, a few million dollars. So, if you normalize for that, the two is probably a little bit lower than that, a few million bucks lower than that.
So they're just -- Sagard continues to build out its capabilities, grow its staff, build its platform, and is operating just below breakeven is the way we think about it, and then, Power Sustainable Capital, I've already mentioned about good growth, new products, new funding, but at an earlier stage in its development in terms of the fees that it is collecting, but in an area where we think there's pretty explosive growth in the years ahead. So, those are my comments on our platforms.
I'll turn to page 18. We talk a lot about the standalone businesses and I want to make a comment here. When we launched the strategy around the reorganization, we talked a lot about the platforms as being the standalone businesses, as being a source of capital. And the way our strategy has worked out, the opportunities to raise capital and return it to shareholders have actually come from different parts of the portfolio.
So, from the beginning of 2021, we have raised $1.8 billion of capital, but it hasn't come from the standalone businesses, which we kind of indicated at that time it would have. And it just goes to show that you need to be active in the management of these strategies. Our goal hasn't changed, but how we've executed it has changed, given what happened in markets. So, the 1.8 has come from a variety of sources.
I think we told you last year or in 2021, we sold our secondary interest in Sagard Europe III. We took some money off the table with Wealthsimple. We sold energy assets into the Power Sustainable Energy Fund and took money back from that. We sold GP strategies. We ended up selling our stake in China Asset Management to IGM and took back Great-West Life shares in cash. And we've just announced the sale of BELLUS Health, which will be another approximately $100 million Canadian when that closes.
So, we've raised a $1.08 billion over the last couple of years, and yet we still have Leon and Lumenpulse and Peak in the portfolio. We have taken steps to surface value by taking Leon public, and Lumenpulse just did a financing in the last couple of quarters. But we are on path nonetheless to raise capital and then return it to shareholders. And with that, I'll turn to 19. During the quarter, we returned approximately $375 million to shareholders through our dividends and through buybacks.
Last year, by the way, we returned about $1.7 billion to shareholders. We had $1.3 billion in dividends and $415 million in buybacks. We've done all this and we now have our cash at kind of an unprecedented level; got about a $1.07 billion in cash. If you deduct the dividend that we declared yesterday, from that you get to a $1.35 billion, if you take off the dividend payable. We like to keep two times fixed charges. So, we got lots of firepower here.
With that, I will turn to page 21. One of the things we are focused on is the net asset value discount. And we were as you know, before the reorganization, for five years. They're trading around 35. We've done a good job through communication and transactions of reducing it. It has gapped up in the recent period. We can have a long discussion about why that is. I just simply summarize it that this is an opportunity.
Not happy about it gapping out, but it's an opportunity both for investors as well as for Power Corp. in terms of buybacks, we have had our heads down a lot in the last six months or so, working on a number of things, including some of the transactions we announced. And we're really looking forward to getting back out and talking to investors in a more active way than we have in the last period about what we're up to, what we've done and what are some of the opportunities going ahead.
So, with that, Operator, I think I'm going to conclude, I will ask you to open up the lines for questions that we may have from our participants.
Question-and-Answer Session
Operator
Absolutely. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Geoff Kwan with RBC Capital Markets. Please go ahead.
Geoff Kwan
Hi, good morning.
Jeffrey Orr
Good morning.
Geoff Kwan
My first question was for your non-core assets, such as Peak and LMPG. Can you talk about maybe what some of the metrics or things that you're looking for to be in a position to eventually monetize it?
Jeffrey Orr
Thank you. Good question, Geoff. So, while we have announced our strategy focused on financial services and, long-term, those are not core assets if I can put it that way. They're not on strategy. We were very clear on two things. One was that we don't have a gun to our head. We're going to realize value in a way that we think will maximize value for Power Corp. And secondly, we are an investor who we are good partners with people that we join with, and we made commitments when our strategy was different to the management teams and to other shareholders. And so, we honor our commitments and do things in a sensible way, not in a hurried way.
So now, specifically, let me give you some examples. With Lumenpulse, right after we announced our new strategy, we had COVID hit. And all of a sudden we had this company that was really doing well, and growing, and making acquisitions, and its whole business just got totally turned upside-down. Project got stopped; a lot of what they do are often on big projects, sometimes at the tail end of projects. And they ended up -- their whole business clients weren't there, so it was just not a good opportunity for us to realize capital. As you know, we filed for an offering, I think it as in 2020, but my memory may serve me wrong there.
They did a third-party financing in the last couple of quarters, which is great, that's the next step. And at some point, we'll think that the value is there and the business plan is at a good point where we can bring in some other investors and start to monetize our position. But we're not going to do it in a way that we're leaving value on the table, and the timing wasn't there. Lion is a really interesting one. Lion was only $53 million-$54 million at the time we announced the reorganization that we had invested in it. And then electric vehicles took off. We took the company public as a step in realizing value.
And then, all of a sudden, the bloom was off the rose in terms of everything that was venture capital and everything that was EV, and all of a sudden, and this company needs capital to grow. So, we have this great company, and all of a sudden the capital markets and the VC markets have shut down. And so, do you try and push it out and just drop it when it has got this great future? We actually put some more capital in last year, $25 million, to support their offering. So, you could say, "What are you doing? That's off strategy?" Well, it's $25 million in the context to Power Corp, and we're supporting the management team and other shareholders to make sure we get the company to a point of maturity where its proper value can be recognized, and ultimately realized by Power Corp.
So, I don't know if that's answering your question. I'm sharing with you how we look at these things. We do things that are smart, we do things that maximize our value, and we do things that honor our commitments to the partners we have. And in the meantime, we realize value using other assets where there were opportunities, that's it.
Geoff Kwan
Okay, thanks for that. And my other question, just given the anticipation we've seen in credit markets, and just more broadly speaking, wondering if you can talk about how you see that in terms of, say, for example, opportunities for your existing operating businesses? And then on your alternatives platform, whether or not that making opportunistic acquisitions potentially a strategy, but also to its -- for the companies that are within the portfolio, if that might create any sort of headwinds in terms of if there's any sort of debt rate refinancings that need to happen within there?
Jeffrey Orr
Okay, I'll start. And then, Greg, as always, jump in if you want to add anything. I think that if credit markets end up getting dislocated, we've just got some fresh powder in our credit funds and Sagard, and I think will be a good thing. And they'll get some opportunities to earn some good investment -- returns for their investors. Whether there is -- whether, and behind your question, there'll be an opportunity to -- I don't know if that's it acquire our credit capability, I don't think that's on the radar screen, it might come by, who knows. So, I don't know whether that was where you were going.
In terms of our own financing structures, if you were asking about your own companies and their maturities, certainly between IGM, Great-West Life, GBL, Power Corp, we don't have any worries about refinancing, we've got very, very -- well, we've got very strong credit ratings, and we've got very staggered debt maturities which we've always, for decades, made sure we manage. And I couldn't speak to the individual companies within our different portfolios in the [alts] (ph) area, if that's where your question is going. Maybe you can clarify a little bit that one. I wasn't sure where you were talking about in terms of difficulties with our own companies in credit markets. Do you want to just [indiscernible]?
Geoff Kwan
Yes, whether or not within Sagard or Power Sustainable.
Jeffrey Orr
Yes, I am not aware of any -- I have not heard anything that they're concerned about credit markets. I think in the fintech world, I will say when you've got -- Silicon Valley Bank, they were a big funder to a lot of the fintech companies. So, that sector, in general, not just in our portfolios, in general has got, all of a sudden, a player who was probably the leading player in terms of banking those businesses out of business. So, I know that has created some shortage of capital across the fintech space, and I suspect that will be an opportunity. But everybody's -- for our funds, in terms of making investments because we've got capital to work -- to play. But that's a general comment.
Greg Tretiak
Yes, that's exactly where my mind went on that question, Geoff. And certainly management is working through getting those startup entities that need capital, and obviously raising capital where they can, and looking for alternatives. And that's a work in progress. But nothing that I think is disrupting their strategies in that marketplace would be my take on it.
Geoff Kwan
Okay, great. Thank you.
Jeffrey Orr
All right, thank you, Jeff.
Operator
The next question comes from Jaeme Gloyn with National Bank Financial. Please go ahead.
Jaeme Gloyn
Yes, thanks. First question just related to the Rockefeller transaction. Clearly you guys and the family had a significant role in putting that together. Just curious if you could talk a little bit more about the history of that deal coming together? And are there other such opportunities available within the power complex through those relationships?
Jeffrey Orr
Okay, so I touched on it, it really started with a relationship with Greg Fleming. Greg Fleming, for those of you who don't know, was the President of Merrill Lynch, and then was President of Morgan Stanley. He initially ran investment banking at Merrill, was President right through the financial crisis, and then Merrill got sold to BofA. He went over to J.P. Morgan, ran their wealth management and asset management businesses. I wasn't to say 2015, it's somewhere around there, he left and did his own advisory thing for a while trying to figure out what he was going to do next. We actually hired him as an advisor, and he ended up being, for the three years, someone who we would talk to, at least weekly, about what the opportunities were in the States.
He was also on the Empower board -- he is on the Empower board, and on the Putnam board, and has been through 2015. So, we have a close relationship with Greg. Greg announces to us, in 2018, he's done a transaction to buy into and become CEO of Rockefeller, and brings in the A team, if I can put it that way, former colleagues from the top -- both bracket firms in the U.S., and takes advantage of the dislocation going on, in particular at the high end of the big bulge bracket firms who have become very large, and the very top 1% or 2% of the advisors, not always the happiest campers in that environment. They've taken advantage of that to build out what is now Rockefeller, where I think they've got 90 teams that they've built in there over the last five years.
A team might be three, four, to 10 advisors coming over that have joined them. So, we talk to Greg all the time. And Rockefeller, you may have noticed, have advised on our acquisition of Personal Capital, MassMutual, of Prudential. So, we're talking to them closely. And through that relationship, spoke to them about what are your future plans for Rockefeller, because we're looking to expand into the U.S. and to wealth management. And that led to discussions, which led to the transaction. So, that's the history of it, Jaeme.
Did you want to add something, Greg?
Greg Tretiak
Yes, I'd just say that, and stepping back even in time, that it's part of the DNA of the group quite frankly, in that Paul and Andre, and, of course, their father had a particularly good expertise in developing ecosystems. And I think if you look back through our history, you can see many examples of this type of relationship turning into something that was unexpected.
Jeffrey Orr
Thank you. And that's for reminding of me of that. In this particular case, because I just told you with Greg Fleming, but the Rockefeller family and the Desmarais family have a relationship going way back. Andre Desmarais personally has had a close relationship with David Rockefeller, who is on the Board, and a shareholder of the company, and his father. And so, there was all that angle to it as well. So, that there was the Desmarais angle, and then there was the management angle, and it kind of all came together here. Thanks, Greg.
Jaeme Gloyn
Okay, thanks --
Jeffrey Orr
Now you asked whether we were going to others. I don't know whether we're going to do -- other is a main word, like, I would just show you the 20 deals we've done in the last six years and ask you. I don't know, but we do have our eyes open, Jaeme, at all times.
Jaeme Gloyn
Got it, understood. And then, just a clarification question on the Bellus transaction, is that $73 million that you're expected to receive, is that cash receipt? And then I guess the other part of that is, is it already included in the $813 million of NAV that you've disclosed here, just want to clarify that?
Greg Tretiak
It's outside the $813 million, to start with. And the $73 million is coming in cash; we're not taking any shares back on that particular [indiscernible].
Jaeme Gloyn
$73 million is U.S.?
Greg Tretiak
It's U.S. too, yes.
Jeffrey Orr
Hundred sounds better, doesn't it, Greg?
Greg Tretiak
Yes, it does. It does.
Jaeme Gloyn
Okay, thanks, guys.
Jeffrey Orr
And I think we have that marked on our books at zero in terms of book value.
Greg Tretiak
Right. Not that we look to earnings for that part of the portfolio.
Go ahead, operator.
Operator
The next question comes from Doug Young with Desjardins Capital Markets. Please go ahead.
Doug Young
Hi, good morning. Maybe starting just with the excess cash, last quarter, I think Jeff or Greg, you said two times debt coverage was $700 million, it's $800 million. I don't know if there's a nuance there, but just wanted clarification on that. And if I do the math based on what you've laid out, looks like your excess cash is sitting at $550 million. And as you've said, you've got lots of liquidity here, so why the slowdown in buybacks?
Jeffrey Orr
As I said, we've had our head down quite a bit working on a bunch of things, as you've seen. And so, that's the answer. I don't think there's anything on the $800 million in this -- I think that's a rounding.
Greg Tretiak
That's a rounding --
Jeffrey Orr
So, no change in our run rate cost. We should go back. I don't think --
Greg Tretiak
$780 million to be precise.
Jeffrey Orr
It's $780 million, and it was last time as well, or $770 million or [indiscernible]
Greg Tretiak
Right, this, it's rounded.
Jeffrey Orr
Yes. But we don't manage it to that fine a point in terms of having two times coverage. We've gone below it sometimes, and we've often run above it. Yes, so I think this recent period, we've not only been not been out talking to investors for the last -- but we've been less active on the buyback side. We said we've been busy on a bunch of things and looking forward to getting back on both. That's all I can say.
Doug Young
Okay.
Greg Tretiak
Thanks. And I don't know if that helps.
Doug Young
No, that's fine. And then just going to the Power Sustainable, the two items, I guess the energy infrastructure lost and seasonality in snow, I get that. I guess I'm more curious about you picking a $33 million revaluation of NCI on Power Sustainable energy infrastructure. And Jeff, you kind of described it and how you've done this in the past, but you don't get to realize or write up the value of these entities, you just take the hit upfront. What is the unrealized gain on the Power Sustainable energy infrastructure partnership that hasn't been recognized?
Jeffrey Orr
Don't know the answer to that. [Indiscernible]
Greg Tretiak
I don't know that I have that right now, Doug, but maybe as we go through the call, it'll emerge. But I did give you a number that we're vending in projects that we currently have on the balance sheet. Basically, wind projects out west, there's about four or five of them that the capital that we have in them is about $350 million and we would expect to get a gain or a revaluation again on those as they come to commercially viable projects. And so, we probably get somewhere in the neighborhood of $40 million to $60 million of gain coming through at that time, of course, of which we will have to take a NCI liability on. So, 60% of that because we're 40% of that particular fund, and the other partners are 60%. And so, we're talking about another $30 million on that project, those set of projects alone. And, of course, we're developing projects in addition to those that will be vended in, and we'll have the revaluations. And so, that's what I alluded to. I think that over the quarter, what we'll do is we'll reach out to the Street here and try and lay that out so that you can understand and anticipate what might be evolving over the next several quarters.
Greg Tretiak
We have to give greater clarity on this. We have lots of questions on it, so your question is a good one, Doug.
Doug Young
Yes, and I just think like I kind of follow where you're going with it. You've had a bunch of these over the years. If there's unrealized gains that are properly being reflected now that I'd be curious. And if it's not just this, there's a number of them, I'd be curious what that conservatism is. And I think other people would be as well. But we can kind of leave that for now, but I guess maybe I'll kind of give a last high level question. Our view is always the cleanup of the Power Structure would mean running a small HoldCo and concentrating most of the insurance business at Great-West in the wealth and asset management at IGM. You've talked about this before, but you're building an investment platform up at Power. You've moved IPC over to Great-West. There seems to be a blending of the two. And so, maybe, Jeff, what's the end goal here? Like what am I missing? What's the end goal here? What does a clean Power Corp. structure look like when you're all set and done?
Jeffrey Orr
Yes, so, lots of things happening. That's a big question and a lot of different forces at work, not just simplifying. That's what I made the comment earlier. Like, when I look at Mackenzie acquiring IG Investment Management, which you may say is all inside of IG, that's to give Mackenzie more scale to compete. When I look at GLC two years ago, was it the Great-West Life sold -- Canada Life sold GLC assets in Mackenzie that is concentrating scale at Mackenzie.
Same thing happening here at IPC; IPC is a $33 billion wealth manager, and there's another $50 billion over at Canada Life. And putting it together, plus all of the capabilities that they have in terms creates a more competitive platform, because we're not just cleaning up and simplifying Power's platform. We spend a lot of time strategically working with the management teams of Great-West Life and IGM to position those businesses for greater growth. And you're seeing, so some of these deals are not about simplifying Power Corp. They're about getting our main operating businesses in a more competitive position. Your question with respect to Power Corp, ultimately the goal is to have the standalone non-financial service businesses not within the portfolio, but as we said, not in a rush and not going to do anything stupid to get there.
And then, secondly, create the scale in the investment platforms to create streams of income without putting more capital into it and simplifying what's there, so that we don't have a stream of businesses that people don't understand. We're partway down that path, but what we have is an accounting kind of I won't say I should not be critical of accounting. We have accounting numbers that make it really hard for people to understand. So, we are simplifying the business, but we haven't done a good enough job of explaining the value creation and it gets lost in the accounting. I said a lot there. In a nutshell, I said a lot of the moves are not just about simplification, but building the strength of the businesses. And the second part is we are trying to simplify power, so at the end of the day you can say they've got this asset management business and they've got this much seed capital. And the seed capital is producing this kind of a return. And I can value it. And therefore, I can get my hands around it. That is the end goal. Sorry for the long answer.
Doug Young
No. No, I appreciate the color. Thank you.
Jeffrey Orr
Okay. Thanks, Doug.
Greg Tretiak
Doug, I want to sneak in. Doug, Page 56 of the MD&A you can look at that to get more color on the position of power sustainable and the power energy assets. And just on the energy assets alone, I think the unrealized value would be somewhere around $400 million in total. And we would have 40% of that, so, roughly $150 million-$160 million.
Doug Young
Thank you. Okay, let's hold it up. Okay, great. Thank you.
Operator
Your next question comes from Graham Ryding with TD Securities. Please go ahead.
Graham Ryding
Hi, I just had one question. Just with the Canada Life platform now with the wealth platform with IPC as part of it, can you just sort of describe your vision for this platform relative to what you have at IG Wealth? How are they similar and how are they perhaps unique and different?
Jeffrey Orr
Yes. So, great question. Thanks, Graham. So, first of all in terms of vision, IPC not only brings scale to the Canada Life platform but they also have far greater IIR capabilities. They have got discretionary platforms. So, as you know, a lot of advisors move to a discretionary model where their discretion is given to the house or the discretion is with advisor.
So, you add all of those capabilities. And it brings a management team that's very capable as well that are excited about this. So, over time those capabilities will merge into a far greater suite of capabilities for advisors. So, they can pick way they want to grow. How they want to pursue their careers, how they want to serve their clients, and Canada Life has the ability to accommodate all of that and get the economies of scale over time from having a bigger platform to do it. So, that's what it does for Canada Life. The models are different. You know the history of IG Wealth. So, IG Wealth has been -- but it's model is changing too. So, I have to say IG Wealth had been primarily bringing advisors, train them, and then have primarily a proprietary shelf and was primarily mutual fund.
Now, that's been turned upside down in the last five - six years. You've got the recruiting model that used to bring in many, many advisors with a I would say not -- a certain success rate in terms of turning them into a successful advisors. They have just paired that back four - five years ago. They are trying to hire like a fifth of what they were doing. Yes, they have got mutual funds, but they are into wrap programs and unbundle programs. And so, the product shelf has changed dramatically. And they are now recruiting from the outside. And while it's still mostly IG wrapped product, there are lots of different sub-advisors in IG itself, no longer has IG Investment Management. So, the IG Wealth model has been revitalized, and therefore, much more competitive at going after larger clients by the way and getting new advisors in. But it still has a history of coming from kind of the IG product side of it. And so, it's got a different feel and a different culture to it.
Over time, do they become the same 10 years out? I don't know. I am not sure. But, the best I can do as in terms of compare and contrast -- I didn't always do well at those things in college when you have these -- gave me that compare and contrast question. They have different histories, are little different, but they work. IG Wealth is setup for success within IGM, and cannibalize that itself enough capabilities here to build a great wealth management firm going forward.
Graham Ryding
And is there a large insurance component with the Canada Life business relative to IG Wealth?
Jeffrey Orr
Look -- yes, so, two -- within IG Wealth or within Canada Life?
Graham Ryding
Yes, this Canada Life business that is acquiring IPC, is there a bigger insurance component to sort of the wealth management class [indiscernible]?
Jeffrey Orr
Yes, good question. Good question. So, first of all, Canada Life, we consider their advisors to be independent advisors. But, the advisors have different practices. Some of them are very wealth focused. They would have seg funds which is really just a protected wealth product. And mutual funds and increasingly wraps and discretionary, so we've got a big wealth practice. Some are at the other end that are very focused on say power insurance and high net worth and ultra high net markets. Some of them are mixed practice between insurance and wealth. And a number of them are also focused on the group market. So, they would have individual clients who are running businesses and they make a practice out of bringing group clients that also feed channelize group business.
So, you do have on the many many advisors that work with Canada Life, a myriad of practices. But a lot of them have wealth as some part or an important part. And in some of the cases, the most important part of their practices. This sets Canada Life up to be a much better home for those advisors going forward as they build up these capabilities.
Graham Ryding
Okay, that's helpful. Thank you.
Jeffrey Orr
Okay, great. Thank you, Graham.
Operator
The next question comes from Tom MacKinnon with BMO Capital Markets. Please go ahead.
Tom MacKinnon
Yes, thanks and good morning.
Jeffrey Orr
Good morning, Tom.
Tom MacKinnon
A theoretical kind of a question Jeff here, I mean you've simplified power. And as a result, you've sort of -- what you had before was maybe more of a complicated power corporation and some of more pure plays down below without kind of significant impact from say quote unquote other vehicles. But now, if I look with ChinaAMC now pushed down into IGM, we are all simple, still at IGM, north least now at IGM. There is still some Great-West at IGM. There is now Rockefeller at IGM. So, like less than 75% of IGM's earnings are really from IG Wealth and Mackenzie. So, I understand the strategies involved in here. But, this is not necessarily a kind of a pure play anymore. And, even the push from the IGM people almost doing bit of some of the parts or almost in NAV valuation approach to IGM. So, I'll just make the statement. You have certainly simplified power. But, have you made the downstream company IGM a little bit more complex now? And so, just curious as to what your comments are with respect to that.
Jeffrey Orr
Yes, good question. I don't think we have. But, I think the brands can kind of get in the way of what's actually going on because I have described the strategy a little more simpler than that. IGM has -- is in the wealth management business and it's in the asset management business. In the wealth management business, it's got one business in Canada which is IG Wealth, which is a much more mature [indiscernible] simple, which over time could prove -- as we look at -- we are long term holders as you know.
Like we'll look back in 10 years and say is that a significant part of IG Wealth or is it not? Or, of IGM excuse me, or not? I don't know. But, that's kind of an investment in the future which their cost base I'll remind you is zero. Actually, it's negative right now because it - so, that's kind of not even - that's a stake in the future and exciting one. But I don't do that as noise. It's not complicated. It's just is what it is. So, they have a leading wealth management business in Canada in IG Wealth poised for growth. And, they now have a 20% interest in a very exciting position in the U.S. And hopefully over time, we can increase our position in that company as opportunities come out. We will see. That's their wealth management platform.
In asset management, they have Mackenzie but of course alternatives are very much where the puck has been going. So, they take an opportunity to buy [Norkley] (ph), and that's smart if you have an asset manager and Mackenzie is not just sitting possibly without. They are taking their alternative products. And then, incorporating them into their products, and bringing them to the marketplace. So, it is what asset managers many of them are doing around the world; buying into alternative space. So, they are in the wealth management business. They are in the asset management business. And, they now have vehicles in China and the U.S. on top of their Canadian market. That's the way I think about it. Some of the parts and looking at the strategic what I think really a means by which IGM was pointing out to the market that there is a chunk of their portfolio that wasn't really earning money.
I will take great [indiscernible] out of that for a second. Was at an earlier stage of development and even ChinaAMC at the time was not earning as much money. It's been growing its earnings a lot. Kind of focusing on the fact that, hey, maybe these businesses are worth. Over here Mackenzie and IG Wealth are worth X times earnings, but this part of the portfolio is to be looked at on a different basis. I think that's what they were, in my view, doing in terms of putting it together as strategic investments. So, that's my answer to the question.
And Great-West Life, I'll say is just watch us by our actions that we set that position up a long time ago. And IGM used that as currency in terms of our CMAC transaction and Great-West Life, I mean the natural home for that is at Power Corp. in terms of our ownership. And we took advantage of that transaction to increase our stake at Power Corp and Great-West Life, and that made the financing of that transaction work for IGM, and we were happy to buy more Great-West Life. We're very excited about what's happening. So, that's what it is. I don't view it as complicated. Maybe it's just clear in my head what we're doing, but I don't view it as complicated.
Tom MacKinnon
Understood. Thanks.
Jeffrey Orr
Some companies, Tom, I'm going to make a comment about one more comment on this. A lot of companies, your own employer, many big financial institutions, when they buy things, they brand them with their own brand; BMO this and BMO that, even my old stomping grounds, Nesbitt Burns or BMO Nesbitt Burns. We have had a different approach where we have left brands standing in their local markets because we thought they had a lot of value. And I think it ends up people looking at us and saying, wow, you're really complicated, because you got this brand, you got that brand, and you got this brand, when in fact, we're a wealth manager and an asset manager at IGM. That's what we are. And we probably end up looking a bit like a Christmas tree when with all kinds of ornaments on it, when in fact we're really in some pretty simple businesses.
And I'll tee off your question to talk about Great-West Lifeco's new disclosure, because Great-West Lifeco this quarter introduced what they're calling their growth drivers, but is really a new way of segmenting what the businesses they're in, right? Starting with workplace solutions and wealth and asset management and other companies describe themselves that way, and we tend to use our brands and then people think we're complicated. I think we're in two or three pretty simple businesses around the globe.
Tom MacKinnon
Yes, I mean, maybe I'll just add one comment on that. There was in terms of this multi brand approach, with respect at the Great-West Life level, years ago, there was like at least four brands, Great-West Life, London Life, Canada Life. Freedom 55 and the decision made there was to put it all under one brand, so it wasn't going to be like a Christmas tree. Is there anything here about amalgamating thing at the IGM level?
Jeffrey Orr
Yes, I don't see that, because Rockefeller is a great brand in the U.S. You're not going to call it IG Wealth. And by the way, we don't control it. So, that's another reason like Mackenzie is an asset manager that you're not going to put its brand the same as IG Wealth. So, I don't see us doing that right now is the answer. So, I think we just have to make sure we explain our business in a way that we think of it, which is this is our wealth management activities. These are our asset management activities. I think we need to move more in that direction so we don't unnecessarily confuse people.
Greg Tretiak
Yes, I think I'd just add on that, Jeff has said, the other perspective when you're looking at the brands is obviously the brands that are client facing and how they face the client. So, the distribution channel interplay with that is Mackenzie, Mackenzie is Mackenzie to their clients. And the brands that they're using for alternative asset managers stand behind them and are on the product shelf. And I think that's well understood in the distribution channels and at the client face. So, I think that's the other perspective.
Jeffrey Orr
And I think even BMO would do that, and other banks in some of their markets, but they don't report to the market that. They won't report that they're. I can't remember that. Sorry to use your example, BMO example, but BMO won't report on its U.K. or its European Asset management businesses, the name of the brand. They'll just say our asset management businesses, when they report to the market, when they interface with their clients; they actually have more brands than that. And we tend to report to the market that way and I think create some confusion. But anyway, you said it was a high level question. We're dealing at a high level here, Tom.
Tom MacKinnon
Always great discussion, so thanks very much.
Jeffrey Orr
Thank you, Tom.
Operator
Ladies and gentlemen, there are no further questions. So, this concludes your conference call for today. Thank you for participating, and you may now disconnect your lines.
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Power Corporation of Canada (PWCDF) Q1 2023 Earnings Call Transcript