Power Corporation of Canada

TSX:POW

Earnings Call Transcript 2021-Q1

[Operator]

Ladies and gentlemen, thank you for standing by and welcome to the Power Corporation First Quarter 2021 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]I would now like to hand the conference over to your speakers today, Mr. Jeffrey Orr, President and Chief Executive Officer of Power Corporation of Canada. Thank you. Please go ahead.

[Robert Jeffrey Orr, President, CEO & Director]

Thank you, operator, and welcome, everyone, to our quarterly conference call. Thanks for joining us this afternoon on a Friday afternoon. I would -- it's my pleasure to report on our Q1 results. And I'll dive right into the presentations. You've got the standard forward-looking statements, disclaimer statements on Pages 2 and 3. They seem to be getting longer every quarter. So we'll just skip over there -- over those. And let's talk about the participants.I'm with Greg Tretiak, Executive Vice President and Chief Financial Officer of Power Corp., and the 2 of us will make the presentation and answer your questions afterwards.So let me jump then to Page 6 and just talk about the fact that this particular call as well as our annual meeting, our Power Corp. disclosure statements are complemented by presentations and releases by Great-West Life, IGM and GBL, and there's been a lot of them over the last few weeks. So you can also avail yourself to the information that those companies have provided or follow-up with direct questions with each of those companies. I'm sure they'd be happy to answer any questions that you might have.I'll go to Page 7 then and just talk a little bit about the quarter. It has been a very -- first quarter was very strong for our company on really every measure. The public operating businesses had really good quarters, both from an earnings point of view, but also a business momentum point of view. So good progress in our public companies. And then at the Power Corp. level, we had a number of things that occurred that both validated the investments that we've made over the last several years as well as continued to build momentum for building our businesses in the future.It's only been 8 weeks actually since we had our last call regarding Q4. But even since over that period, we had a number of announcements that were in furtherance of the strategies that we've been describing to you, some fundraising going on by our alternative investment platforms. We also had the Wealthsimple transaction announced last week. I'll speak a little bit more about that. Lion Electric began trading this week. So that deal closed. And it had been announced back in the fall.And as well, probably one -- maybe not associated as much with our group, but on March 30th, Dialogue, which is the telemedicine company, went public. That was actually founded by Diagram, which is an incubator launched in collaboration with Power Corp. and Sagard. And so that was just another successful company coming out of our fintech ecosystem and further validating the reputation of that whole effort.I will jump over quickly to Page 8. And just to say, from a financial point of view, in the first quarter, the net asset value was up smartly from $41.27 at the end of the year to just under $46 at the end of March 31, and then that has been increased over the first month and a bit of the second quarter. And as of earlier this week, was slightly over $50 in the way that we calculate that. A good result in earnings on both a net earnings and adjusted net earnings basis. And the Board declared a dividend to $44.75 at the meeting yesterday.And with that, I will pass it to Greg Tretiak to talk a little bit more about our net asset value and about our financial results.

[Gregory Dennis Tretiak, Executive VP & CFO]

Great, thank you, Jeff. A few quick remarks on Slide 9. And start with -- sounds a little redundant, but nevertheless, on March 31, our NAV was up 11% from December 31. And since the first quarter ended, 2 material announcements. Wealthsimple had a funding round in which it completed it on May 3, and that added $0.94 to the NAV. March 7th, Lion completed its business combination, which added $0.52 and along with strong share price increases at the 3 publicly traded OpCos. We were up another 10% ending at, as Jeff just mentioned, over $50.With that, I'd go to Slide 10 and look at the earnings that we're reporting. You can see that we're reporting on a net basis $0.82 and on an adjusted basis $1.16. And that adjustment, I will talk to later on. But first, I go to the top of the chart. And you can see there that the $0.97 was up over 31% over the prior quarter and the previous year. Great-West Life reporting a really strong quarter with all segments up sharply over $20. IGM reported record earnings driven by record flows and record AUM and AUA. GBL was at an increased contribution with its portfolio companies rebounding nicely from the pandemic and that is the composition of the $0.97.When we look at the alternative and other investments, $0.38 contribution versus the $0.12 in the prior year. Power Pacific contributing most of that and it manages our Chinese equity fund. In the quarter, we had $225 million of gains, which were realized. That was taking advantage of the significant rise in the Chinese equity markets through 2020, well-timed and good time to put some cash away given the market pullback in the first quarter. Stand-alone businesses, nothing significant there in the quarter.And then we have corporate and other operations at $0.21. That has $0.06 in it that is a tax item relating to the significant gains, I just talked about on the Chinese portfolio. And you typically wouldn't see that flowing through our statements. Given that, we have sufficient tax losses to offset those type of gains. However, given the significant rise in the Chinese equity markets in 2020, in Q1, we recognized a tax benefit in that period related to those gains. And the 2 of them obviously offset. And it was just a timing issue with respect to how the tax benefit and the tax charge were booked.I'd take you to the adjustments and I'll leave the accounting lesson to Page 13 and 40 of the MD&A. But just to give you the brief, in the $0.34, there's a $0.31 remeasurement of the put liability held by certain Wealthsimple minority interest. The liability was recognized as a result of the material increase in Wealthsimple since October. And this item too will reverse in Q2 as the put rates will be extinguished upon closing. However, when that does reverse, it will go through retained earnings. So when you're looking at our Q2 earnings in the future, we'll remind you of that, but it will go through retained earnings along with a number of other gains related to the Wealthsimple transaction that will be recorded in that quarter.So Mr. Orr, I will pass it back to you.

[Robert Jeffrey Orr, President, CEO & Director]

Thank you very much, Greg. So then the next couple of pages are just here. You've seen them before, but for some of them that may be on the call that haven't been on previous calls, you can go through Page 11, just talking about our strategy focused on financial services. And Page 12, just reiterating that we think about it in terms of 3 important levers being the organic growth that's going on at our publicly traded operating companies. Our M&A levers that we are trying to use actively and have been successful at over the last a year or so. And then, we've also got all the actions we can take at the Power Corp. level to enhance value as well.So I'll move on to Page 13. At our publicly traded companies. A lot of focus to the Great-West and IGM, which are more earnings driven than GBL on capitalizing on the investments we've made over a number of years and turning that into higher momentum. We're seeing it in across many of those businesses in terms of their business growth, but also focusing on turning that into higher earnings and cash flow growth, a key priority for the management teams. I've mentioned the M&A side of things.And then the last bullet on the page, clearly communicating to all of our stakeholders, the value creation strategy that we're pursuing and trying to make sure it's very clear to everybody what our goals are, what our strategies are, how we're succeeding at it, what we're doing, what we're not doing, we're trying to be as transparent as we possibly can.I'm going to flip over to Page 14. And you just got some highlights from each of the businesses. I'm not going to dwell on all of this. We had very good sales at Great-West Life, good progress at Empower, Putnam, actually had a quite a change in their sales mix going on there with the change in what's happening in the markets. And then good results across our capital and risk solutions at Great-West, just kind of broadly based very, very strong results. IGM, record quarter, record assets, record flows. Obviously, Mackenzie has been doing an amazing job. But IG Wealth also having very good flows. I'll talk a bit more about that on one of the slides coming up. And then GBL continuing to pursue the strategy that it has pursued for some time and continuing to increase value for shareholders. Doing very well, having very good results in outperforming its indices, and I'll make a comment on that later in the presentation as well.I'm just going to highlight then on the next few pages a few of the things that are going on in the group. I'm not going to be exhaustive. But Empower's business is a very important one for us and going to continue to grow. And just to make the point on this page that it is addressing a very, very large market in the United States. The first bullet on the page is just to state clearly that the integrations of Personal Capital and MassMutual are on track. We continue to monitor those very closely. And that the growth at Empower is strong organically and then, of course, is being complemented by acquisitions we can do.The chart you see on the page is just a little quick price on American's financial wealth. Americans have $59 trillion of disposable financial assets and the defined contribution business on the chart far left is $9.1 trillion of that. This is a very big market and Empower now has got over $1 trillion. We're a very significant player in the defined contribution business. What you see to the right of that, though, is that the IRA market, which you think about in Canada as the RRSP market, the tax assisted personal savings market, is another $11 trillion. And then the nontax assisted individual market of funds and securities is another $27 trillion. And the D.C. market is a feeder for the IRA market and the taxable business.And so with our personal capital acquisition, which is directly targeting IRA and taxable assets, but also with the personal capital tools plugged into the retail wealth management effort of Empower, we are looking to capture a growth in the IRA and taxable markets. We're much, much smaller players there, but we think there's great opportunity there. So the point of this slide is these are big markets, and we've got a very strong platform that we built in the D.C. market. We'll continue to try and build that even stronger and larger as we move forward.Page 16. It's just a little highlight on IG Wealth. A lot of the enthusiasm around IGM has been around the great momentum that Mackenzie is enjoying and they have been continuing to build on that momentum, but not to lose sight of the fact that IG Wealth management is also gaining really good traction. And you see in the chart that an increasing share of their sales are coming from households with over $0.5 million with IG Wealth and that's part of the strategy, and that's growing faster than the part of the market, which is for those with assets below $500,000, which is what the company is trying to do.And on the right side of the page is just a little highlight that the Company's business model is quite different from those who haven't looked at it for a while. For example, there's now $22 billion of their client assets in what's called iProfile, which are private portfolio pools targeted for high net worth, you can see that they are -- have very strong Morningstar ratings, good performance, and those products are continuing to be enhanced. They're multi-manager programs. They continue to be enhanced with new pools coming in, and the team is looking at an expanded use of liquid alts and private market investments as well to add to some of the returns in those strategies. So lots happening in IG Wealth, and they're starting to show real momentum in the marketplace.I will turn to Page 17, which is on GBL. And just a couple of comments here, but GBL continues to actively manage its portfolio. It had a lot of transactions over the last year, picking up on megatrends in the world and in particularly focusing on health, consumer, sustainability and technology, very different from where it was a number of years ago. And in fact, since the new team took over there in 2012, they have had great returns. I think the number is -- I talked about at the annual meeting this morning over that period since 2012, they've produced a 9.5% compounded annual return to their shareholders versus their benchmark, which is 7.3%. So continued good progress at GBL.Okay. I'm going to turn and spend a few minutes on the group's fintech strategy. So everyone is clear what it is that we've been up to. We had really 2 levels of the fintech strategy. The first was with a couple of large bets, if I can put it that way, where we backed Wealthsimple in Canada and Personal Capital in the United States. They were both companies that we thought could be disruptors and had really interesting -- an interesting approach to the market and could really gain a lot of traction in the marketplace. So -- and the last year has validated in our minds that those were -- that part of the strategy was successful. We've talked about Wealthsimple. We'll talk about it in a few slides about the wealth creation and the impact they're having in Canada and their client acquisition and obviously, the value creation for our group.But Personal Capital are also an incredible platform that we're funding as part of our group over the last 5 years and is now an integral part of our Empower strategy. At the bottom of the page shows the other piece of our fintech strategy, which was not nearly as much capital, but one which has had really strong benefits, and it was derived initially to provide our group with -- and our management teams with a window into what was going on in technology, but it also has become an integral part of what we're doing in our alternative asset management platforms.So let me turn to the next page 19. And just give you a quick profile of Portage. And so, Portage has invested in some 50 companies that they've invested in, in fintech businesses. The great majority of those are not in Canada and they are businesses that are in segments and verticals of financial services that we care about, we're interested in. We haven't put a lot of the capital. Most of the capital is from third parties. And a lot of these companies, if you haven't heard of them, you will hear of them. They're in -- they're all disruptive type companies that are looking to change the landscape in the areas they operate in.The most important benefit for us here is that the interaction of the management teams at Canada Life, at Mackenzie, at IG Wealth, and Empower with the leaderships of these teams has really put our management teams on their front foot when it comes to changes that are happening in their business. And yes, there's been some partnership opportunities that have come out and there's been a number of those and will continue to be, but that's one benefit.But the even bigger benefit is just having our management teams, having a much clearer idea and sense of urgency around where their businesses could be changing and where the business models are going. That's been the been the big benefit. But then, of course, we also now have a very successful VC business. I think Portage, is now one of the most successful and largest fintech venture capital firms in the world. And so, this has just been a great journey.Okay. I'm going to talk a bit on Page 20 about Wealthsimple. You've probably seen all this before, but I'll just quickly go through the numbers. So last Monday, I should say, 2 months ago, the financing was announced. It included Meritech and Greylock and other institutional investors, although there seemed to be more attention around Greg and others. Certainly, from my family and children, there was much more interest in that particular piece of the announcement. The transaction values, our group's overall investment, including what we have at Power, IGM and Great-West Life has some as well at $2.6 billion. And that includes $500 million that will be turned into cash when the offering closes and an ongoing position of $2.1 billion.The group put in $315 million over the various rounds of financing. So it's a multiple of 8.3x and a compound annual return of 79% before expenses and taxes. And we'll retain a position of 43% of the equity, 60% of the voting valued at $2.1 billion, and we have full flexibility as to what we do with that in the future, whether that's a long-term hold, whether we continue to dilute ourselves through financings, those are decisions we can make in the future. We don't have to make those decisions. We got all the optionality we want.At the power level itself, so now just looking at power's interest, not including IGM, as Greg mentioned, the increase on the mark because of the financing was about a $0.94 increase in the NAV. And then, of course, it had an impact on IGM, which we don't calculate directly. We just pick up the IGM price. So the direct impact on power was at $0.94 on the NAV.You see along the bottom of the page has significant growth in what's happened at Wealthsimple and very strong growth in their assets and their clients. And those clients don't include Wealthsimple tax, where there's a lot of other clients. And they started off as a pure investment firm. They've expanded that into trading. And obviously, the first quarter was a big one for trading, but they've also got other products that I mentioned tax, they've got cash products. They're expanding their offering and have a really, really great inroads in terms of their branding with an important and growing sector of the Canadian population. So very excited about the success of Wealthsimple. We congratulate the management team. Mike and his team, they have done an incredible job.I'll turn on Page 21 to Lion Electric. The merger was announced in the November of 2020, but it closed this past Monday, so it's now trading on the TSX and the NYSE under the symbol of LEV. It is in a very, very attractive and growing sector. Obviously, electric vehicles are going to be the way of the future. And they're in the manufacturing commercial trucks and buses. They're actually in business producing vehicles or supposed to thinking about doing it. They're actually quite far along in terms of their development curve.And the fair value of Power's interest in Lion as a result of the current trading price this week is a $1.2 billion. And to put that into context, our group invested $53 million in Lion. So we've got about a 22x increase in the value of our original investment. We also put another CAD 20 million as part of the closing at the $10 issue price and I think it's trading last time I looked at $18. So there's a little bit of gain also on -- a little bit of money we put in as part of supporting the financing. But the big story from a return point of view is the $53 billion on to $1.2 billion. And they're a very exciting company. I encourage you to learn about them and important for Canada's economy as well we'll be participating in the support sector.Just a quick word on Page 22 to mention that Sagard Holdings and Power Sustainable Capital had a number of financings that they announced. You can see them on the page here. Sagard credit partners, the second credit fund is up to USD 900 million, Portage III launched its third fund, Power sustainable energy announced $1 billion of sustainable energy fund out of Power Sustainable Capital, in which lots of third-party capital invested into that. So lots of good progress on the fundraising.Let me turn to 23. And just have a word about alternative asset management. It's not only important as part of Power Corp.'s value-creation strategy, but it's really leveraging the need that Great-West Lifeco has for its own balance sheet. IGM is looking to provide these kind of products for its clients, either directly for some segments of their clients are mixed into some of the portfolio products that they do. GBL has been active in it as well. And you see some of the examples on this page of where Great-West Lifeco is playing, not just with what's going on at the power level but also in Northleaf and they've got their own strategy to invest in nonliquid alternatives with other players as well. So this is -- this is, yes, it's a value creation strategy at Power, but it's also very synergistic with our operating businesses.24, I'll talk about China AMC, that's been doing extremely well. You see the net profits growing over the last 5 quarters at the bottom of the page. The Assets Under Management continue to grow. It's now USD 285 billion. Is the equivalent there on their Assets Under Management at the end of the year. They are a very significant player in the Chinese Asset Management business. Our share of earnings in the first quarter was $13 million at the power level. IGM also had, of course, the same level of earnings within their business, since they own the same percentage as Power does. That was up from $9 million a year earlier. And the annual dividend was almost doubled. It was declared in the first quarter at $27 million as Power share and IGM, got another $27 million. So this is not just earnings. It's also providing income to our group. Very pleased about the progress of China Asset Management.Page 25. Just talk about our stand-alone businesses. Again, our strategy here is to manage these businesses to surface and realize value over time, while honoring our commitments to our partners, and I've already talked about Lion. With the Lion being public this week, we now have approximately $1.7 billion of the value in these businesses, and 70% of it is publicly created. So you'll be able to observe how that value changes over time.On 26. Again, it was only 8 weeks ago we met, but we're now at 66% of the actions taken to meet our target of reducing our run rate expenses by $50 million a year.And then Page 27. Communication with the market continues to be a very high priority. This call now, I guess, this is the 5th call we've had since we launched the first one in Q1 '20, right after the organization. We've had -- we tried to enhance our disclosure on the investment platform, still work to do there, but making progress. We talked about having 81 meetings with -- 81 institutions last year in 2020 where we met with 63 already this year. And so the beat goes on, the pace is enhancing, and we have more meetings planned. So we're continuing to put a lot of emphasis on making sure that shareholders understand exactly what we're up to.Great-West Life has also made a number of enhancements to their disclosure. They have an Investor Day coming up on June 8th and I think it's going to focus on Empower, given the importance of that business now to Great-West Life and today and the growing importance of it in the future.And then finally, IGM, lots of different disclosure. They brought their sectors and their segments of Asset Management and Wealth Management right down to the after-tax earnings level, put a lot of emphasis on the sum-of-the-parts valuation. And so, lots of good progress by IGM in making sure people understand what they're up to.Page 28, is on our liquidity and our cash. We did suspend the normal course issuer bid when COVID-19 hit the world other than very limited buybacks, sufficient to offset options that are being exercised. And then just -- as we will look to restart those programs, I think we'll look to see continued progress in terms of COVID-19, also seeing how the regulators look at dividends coming out of our regulated entity, i.e., Great-West Life and Canada Life. Those are all the things we're considering. We haven't made any specific decisions as to when we're going to restart the program. We would be anxious to do so as soon as we feel comfortable in doing so. And just to repeat that cash will -- we are looking to return it to shareholders, but we would always prioritize an M&A opportunity if one of our group companies had a great opportunity. We will, of course, prioritize supporting those businesses.29, we're tracking our net asset value. Just kind to know many others are as well. It had been trading around 34% over -- on average through '15 through the end of '18. The moves we've taken starting with the sale of our U.S. Life company and our 3 level buyback and our reorganization and the various things we've done since have narrowed that down. I think it did expand a little bit with the inclusion of Wealthsimple and Lion in our net asset value, not sure that all of that is getting as fully reflected as the NAV that we're including in the numbers. And so as far as we can tell, that's why it's jumped out a couple of points here in the last period of time. But we're still nevertheless very committed and convinced that if we continue to deliver value and communicate clearly, we're going to be able to continue to drive that down as an opportunity for additional shareholder value creation.And I'd just remind you in the box, we have had periods where for long periods of time where we were trading at lower discounts to this. We don't see any reasons. That was at the Power Financial level when we only had one holding company, and now we only have one holding company. So we think we've got more room to move here. And just to remind people, you probably don't remember, there was actually a period where we traded at a premium to our net asset value discount.The Page 30 is just a reminder of those 3 levers and how they translate into value. There's really on the right side of the Page 4 elements to drive value, higher earnings growth at the companies, the potential there for multiple revisions, higher net asset value creation at Power Corp., both through what's happening at the OpCos and what we're doing at Power itself and then the potential to lower the discount, all facilitated by enhanced communication. Those are the way we think about our value creation strategy.And 31, is just really summing up what was a very strong quarter and where we're headed in the future. And I will conclude, operator, my remarks right there and open it up to questions that we may have from those participating in the call.

[Operator]

[Operator Instructions] Our first question will come from Graham Ryding of TD Securities.

[Graham Ryding, Research Analyst of Financial Services]

I just want to talk big picture. First, if I could, clearly the steps you've taken, I guess, since the beginning of 2020, but perhaps even earlier, just to simplify the business and you serve see value for some of the private investments where visibility is not as good as on the public side of your business. Where do you see other areas of opportunities of your business to either further simplify or perhaps potentially transactions that could be accretive to that?

[Robert Jeffrey Orr, President, CEO & Director]

Okay. So great question. I'll start by saying that of our gross asset value, Great-West Life, IGM and GBL are still 79%, 80%, I think, is on the chart, Greg showed you. So creating NAV in our minds is still first and foremost, is making sure that we have strong, growing franchises and earnings at our operating businesses and that we're active in helping them and identify and execute on M&A transactions. So that's the first thing. There's nothing new in that. And as you know, succeeding at M&A is a bit lumpy. You get periods like we did last summer where we did 4 deals. And at other times, you can go where you don't do them. So that remains the -- continue to make progress there. And I think having the market get conviction around what we see as sustainable earnings growth going forward for Great-West Life and IGM absent M&A, but also with M&A adding to that, getting -- communicating well, delivering, executing is a key part of the value creation strategy.The second piece, of course, is at the Power Corp. level. And we've done some things to surface value that have validated that some of the investments that were perhaps not as obvious to the market over the last few years have, in fact, have been creating value. But we still have a long way to go to have what I would call a simplified picture of Power Corp. I think when we're there, it will be our seed capital underpinning the strategies that you saw under Sagard Holdings and Power Sustainable Capital, and we'll have clear reporting on how we're getting returns on that. We still have some work to do on that front.For example, on the energy side, we get cash flow, not necessarily earnings on some of them, like the venture capital and the private equity, we get returns, but they can be lumpy on the capital. So we've got -- we still have ways to go. But imagine the future 2, 3 years from now, that the stand-alone businesses have been realized. The cash has been crystallized. We've returned that cash to shareholders or supported our companies and their growth when they've got opportunities. And what's left is 2 alternative asset management businesses that are producing good returns on the seed capital and we can start to report, hopefully, profit on the asset management activities and have an operating business within Power Corp. We're not quite there with either of them. As Sagard Holdings is close to getting to profitability, Power Sustainable Capital still has a little ways to go in terms of getting more Assets Under Management. Graham, that's the vision and then communicate, communicate, communicate, communicate. And if we execute, we're pretty optimistic about what we can do here.

[Graham Ryding, Research Analyst of Financial Services]

Okay. That's helpful. On the investment platform side, your on-balance sheet investments through Sagard and Sustainable Capital, they did come down a little bit quarter-over-quarter. What were the moving pieces that drove that?

[Gregory Dennis Tretiak, Executive VP & CFO]

Sorry, Graham, I'm sitting a little far away from Jeff, and I couldn't hear your question very well.

[Graham Ryding, Research Analyst of Financial Services]

Your investment platform on your balance sheet, the assets there came down in value quarter-over-quarter. I'm just wondering now what the moving pieces were that drove that? Was it some of the divestments or brought them down?

[Gregory Dennis Tretiak, Executive VP & CFO]

There were returns of capital on the investment platforms during the quarter. In particular, when we did the $1 billion launch of the Infra fund. We took money off the table and that was returned back to us, and that went into the corporate coffers. So that be the biggest one, but there were others during the quarter.

[Robert Jeffrey Orr, President, CEO & Director]

China Asset Management, cashing in some of that?

[Gregory Dennis Tretiak, Executive VP & CFO]

No.

[Robert Jeffrey Orr, President, CEO & Director]

Not having an impact on that number.

[Gregory Dennis Tretiak, Executive VP & CFO]

No, it wouldn't.

[Robert Jeffrey Orr, President, CEO & Director]

So the infrastructure fund that Greg referred to, we rolled some of our existing assets into that with third-party investors. So that's what Greg is referring to taking money off the table. We, in effect, diluted ourselves by rolling some of the assets in with outside investors.

[Graham Ryding, Research Analyst of Financial Services]

Okay. Understood. That's why probably your cash and short-term investments was up that quarter-over-quarter?

[Gregory Dennis Tretiak, Executive VP & CFO]

Yes.

[Graham Ryding, Research Analyst of Financial Services]

Okay.

[Gregory Dennis Tretiak, Executive VP & CFO]

The real part, Graham.

[Graham Ryding, Research Analyst of Financial Services]

Okay. And last one, if I could. Just you mentioned with the Wealthsimple transaction, the 8.3x multiple. Is that a reference to trailing revenue? And I'm just interested what that multiple would have looked like on your previous round of financing that was in that line going in late 2020?

[Robert Jeffrey Orr, President, CEO & Director]

No. No, it's not that. It's saying we invested $315 million and it's worth $2.6 billion, and that's $2.6 million divided by $315 million is $8.3 million. That's all. It was just a multiple on invested capital. I don't have in my head the multiple on revenue. I don't think we've disclosed that.

[Gregory Dennis Tretiak, Executive VP & CFO]

We haven't disclosed it. Yes, no.

[Robert Jeffrey Orr, President, CEO & Director]

But the reference is to actually what it's worth and what we invested is 8.3x.

[Operator]

[Operator Instructions] Our next question will come from Geoff Kwan of RBC.

[Geoffrey Kwan, Analyst]

Just wanted to ask a little bit about what some of the noncore assets that you plan to monetize just with the markets being favorable and asset values being where they are. Does that kind of change, I guess, the time line of how you're looking at, but also too, is what's kind of the criteria that you are assessing as to when you need to monetize? Like is it, with some of these assets, you want to get better financial performance? Or are there other criteria that's involved?

[Robert Jeffrey Orr, President, CEO & Director]

Okay. Good question. So to point out what the noncore assets are, they are Lion, GP Strategies, Lumenpulse and Peak. We don't put Wealthsimple into that category. As I mentioned earlier, we -- that was a different investment altogether. Your question is what's the timing? Has it changed? Is it more urgent, et cetera? I think you've got to be opportunistic in marrying where the markets, where is the demand and where is the company, in particular, in its business cycle. It's a very dynamic decision and I don't mean to avoid the question. But obviously, when we announced the reorganization back in December of 2019 -- I think it was December or the last day in November, I can't remember -- we talked about realizing value over time back then. And did we know that electric vehicles were going to become as popular with all that's happened around the world and the capital markets getting very focused on them. The answer is, we felt really good about Lion, but we had quite frankly, not really had an understanding or any kind of clairvoyance on the fact that there would be so much demand a year later.So you have to be opportunistic and the SPAC opportunity came along. And Lion has performed incredibly well. And then the stack financing in and of itself gives the company momentum. So what have we done there? We've actually surfaced value but not realized any, right? So we've surfaced it by saying it's trading publicly, you can see the value, but we actually haven't taken any money off the table. We actually put, as I mentioned, $20 million and to help facilitate the transaction. So I guess I'm trying to describe a process that you can't have perfect understanding of what you do going forward. But those are the 4 companies and we'll continue to monitor the markets and look for opportunities to realize value. Greg, did you want to add anything to that?

[Gregory Dennis Tretiak, Executive VP & CFO]

Yes. Yes. Just a couple of things, Geoff. You used the word need. And I don't think that we need to do anything with the realizations. It's more realizing the value that is there. And so some of those things will take time, as Geoff just said. We're certainly looking to do that. So -- and it's different for each one of those properties as you might understand. And with Lion, for example, there is a lockup period as well with respect to the agreements that we would have entered into with Lion. And GP strategies as a publicly traded company, and it's doing well. Well, it's done very well during these COVID times. So they're in the business of in training -- putting on training sessions for companies globally and is done very nicely. And so that's an opportunity that we'll obviously be looking at over time as well. So each one of these will emerge over the coming quarters. And I think the upward of thing here is that they -- in some cases, at a maturity where they're trading in the public markets and that's very helpful in designing an exit strategy.

[Geoffrey Kwan, Analyst]

Okay. Perfect. And just my second question was, just thinking about your third-party Asset Management business and trying to accelerate the growth of the management fees. Are there other strategies that you'd like to offer? And is that sort of thing, things you can do with the existing personnel you have in place? Or would they involve potentially needing to bring people aboard or even acquiring firms that may have strategies that you find attractive?

[Robert Jeffrey Orr, President, CEO & Director]

Yes. Good question. And I think the answer is there are other strategies that we would like to launch and they're not necessarily from the people that are on the team now. And a good way of illustrating that is that the private credit funds, which as I mentioned on the call, were just got our second fund up to USD 900 billion. The first fund had a very good track record. That was a team that joined our group a few years ago that had been at the Canada Pension Investor Board actually and the team joined us. The Royalty fund team, the Healthcare Royalties was not part of our team previously.So we are able to attract, and those platforms are able to attract teams and professionals that are in strategies that are of interest, and that is very much part of the growth strategies is not only to build on the capabilities where we already have good track records by creating additional funding and utilizing our LP base or our investor base, but actually adding capabilities to it.I think Sagard Holdings had announced that they were going to be starting a private equity business in Canada in January. We didn't have that as part of the highlights because it was simply an announcement, not a funding, so we didn't include it, but there's one that they would do, that they actually think could be complementary with the private credit business that we already have. So there's an example, Geoff, very much looking to expand the scope.

[Operator]

And your next question will come from Doug Young of Desjardins Capital.

[Doug Young, Diversified Financials and Insurance Analyst]

Questions on China AMC. Since Q1 of last year, the AUM is up 34%. I think that's in renminbi. I think it's higher than in Canadian dollars. But your carrying value of China AMC is actually down 2%. And I get how the accounting works for China AMC. I guess my question is, is there a way you can put a fair market value on this investment in the NAV? Or does there have to be some form of event to -- or a transaction for this to occur? It just seems like there's just 2 different -- they're going in 2 different ways. And again, I understand how the carrying value is calculated. I'm just not sure if there's a better way to put a proper evaluation on this entity.

[Gregory Dennis Tretiak, Executive VP & CFO]

Yes. So as you know, Doug, that entity is held between IG and PCC. And our last mark was when IGM acquired its interest, and that was back in 2016, '17?

[Robert Jeffrey Orr, President, CEO & Director]

I had, but I can't remember.

[Gregory Dennis Tretiak, Executive VP & CFO]

'17 close but haven't closed in '17, we worked on it in '16. Yes. And so, the market's obviously stale dated, and we're in partnership with a strategic partner there, which is CITIC securities in the CITIC group, and they have not adjusted the mark. So the best guidance I could give you is that when you look back at what we -- the multiples, we actually traded it for when we bought it, would be probably still a very good mark to use for in terms of times earnings and times AUM for giving you an indication of where it currently would trade, that would be a good ballpark number.

[Doug Young, Diversified Financials and Insurance Analyst]

Yes. Okay. So there's nothing you can do, but I guess we can play around with it. I guess the second question, just Wealthsimple, I think there's going to be some noise coming through in Q2. And it sounds like the noise is -- it's all going through retained earnings? So there's not going to be additional noise coming through on the earnings side, is that correct?

[Gregory Dennis Tretiak, Executive VP & CFO]

I don't think that we've totally landed on it, but the large majority of it is going to be coming through retained earnings.

[Doug Young, Diversified Financials and Insurance Analyst]

Yes. And then I know you've marked Wealthsimple and the NAV, and then on the carried interest expense, but you obviously haven't reflected the $500 million of cash. That's to come through when the actual event goes through, is that correct?

[Gregory Dennis Tretiak, Executive VP & CFO]

Yes. So that's no, going to close soon. So it will start to come through in the second quarter, and we'll report on that.

[Robert Jeffrey Orr, President, CEO & Director]

But it won't be additional NAV. It will go substituting NAV in shares Wealthsimple cash. It will just show up on it. It's a geography question as to where it shows up on the NAV.

[Doug Young, Diversified Financials and Insurance Analyst]

Yes, exactly. I just want to make sure the cash balance. So the cash balance of $1.3 billion does not include the $500 million, so that's going to be in the?

[Robert Jeffrey Orr, President, CEO & Director]

And the $500 million don't forget it, it's for the group so. So you got to take our pro rata share, which is 37%, 38% of the total group holding. The rest is mostly an IGM. And so, NAV shows up in their balance sheet, and we just reflected in however they're trading.

[Doug Young, Diversified Financials and Insurance Analyst]

Yes. And then just lastly on Lion, you mentioned it, Greg, that there's a year in a lockup. Have you disclosed how long that lockup period is or details around the lockup?

[Gregory Dennis Tretiak, Executive VP & CFO]

Yes. It's in -- for getting the -- yes, exactly. I know it's 6 months. But it's fully disclosed in the filing. If you go to the back filing, you'll find all the information on a lockup, but it's a 6-month lockup period.

[Doug Young, Diversified Financials and Insurance Analyst]

Yes, okay, that's it from me.

[Operator]

[Operator Instructions] We do have one further question from Jaeme Gloyn from National Bank.

[Jaeme Gloyn, Analyst]

So first question really we'll go board on Slide 19. It's sort of frame what's going on in the Portage investments. Is there anything else you can offer in terms of color around some of the investments, which ones you feel comfortable about that are in a mature state, others that are -- you're a little bit more excited about like what would be -- are there any names wants out there that might be like the next Wealthsimple or Dialogue in this group?

[Robert Jeffrey Orr, President, CEO & Director]

I don't think I would like to do that. I don't know, Greg, whether you're comfortable, but there's 55 investments they've made. And I, quite frankly, I hear certain names talked about, but I don't feel comfortable enough to be able to answer that question, Jaeme, the way that you've answered it. The Wealthsimple -- there's some -- Portage did put some money into Wealthsimple, but the bulk of the gain that came in Wealthsimple was not a Portage VC strategy. It was really investments to Power and IGM made. So I wouldn't expect to see an investment come out of there that would result in us owning $2.6 billion worth of value, let me put it that way. That was kind of all outsized, but because it wasn't – Portage is not making $300 million bets on behalf of Power or IGM, nothing like it. So if that's -- the gist of your question, I don't see anything like that coming.But I think there's lots of great companies in there. And the overall portfolio returns that Portage has created off the charts, which is why they're having great success in their third fundraising. So I'm not really being -- I'm not answering your question the way you wanted it, but I don't feel comfortable with doing so. Greg, did you want to add a comment?

[Gregory Dennis Tretiak, Executive VP & CFO]

Yes, Jaeme, I just -- for guidance, if you wish. I mean, they do a really nice job on their website, too, of explaining each in one of the companies and profiling them but the other aspect of that list is that there are companies in there that have worked with our operating companies. And so it's the other, if you will, lever with respect to this particular venture in terms of what we'd like to see happen out of these companies. And Dialogue, for example, was a big success with Great-West Life, and it's on their platform, offered to their group benefit customers. Conquest is a financial planning tool that's being used by the IGM and IPC in our group. So there's that angle to it too. And I think that I'd leave it there because I think most people would love for us to be promoting 1 or 2 of them in addition to their own promotion, but I wouldn't go there either right now.

[Robert Jeffrey Orr, President, CEO & Director]

I just want to come back on my number question when you mentioned Wealthsimple. We had $315 million, as I mentioned, between Power Corp., IGM and then a little bit by Great-West Life and Wealthsimple, including our share within Portage. So that -- in the other Portage investments, we wouldn't have anything close to that. And you mentioned Dialogue. So I think our -- when you look through what our group has in dialogue through Portage, I think last time as I saw, we were just under CAD 60 million of an investment that we made for about $5 million, $6 million as a group. So it was a tremendous return on value. But within these funds, we're going to have smaller positions. We're not going to have big $300 million concentrated positions. That was not the Portage strategy. This was about creating a window into all that was fintech in order to -- first and foremost, make sure we understood what was going on. And the only way you could be successful at it was to create a great investment track record and bringing great investors. So we've done that and then created a relationship model whereby not just our companies, but any other LPs are welcome to interact with the management teams of the investee companies, but our companies have been very active in following up on that. So it's quite a different strategy than Wealthsimple and Personal Capital, as I was trying to explain on the previous page. I hope that clarifies a little bit.

[Jaeme Gloyn, Analyst]

Yes, that's very helpful. And I mean, it's a pretty broad subset of companies here across the fintech space, but -- and there may not be anything here, but are there any gaps in the fintech world or areas that you see might be underinvested, that could be of interest to add or continue to support this portfolio?

[Robert Jeffrey Orr, President, CEO & Director]

Not any that come to mind. We're in -- these are businesses that we're in. And AI enablers is kind of like a business that touches everything. So that's it for now, but we'll see. It could change. The world is changing fast.

[Jaeme Gloyn, Analyst]

Of course. Okay. Next set of questions, I guess, just around the Sagard Holdings and the alternative investment platform. It's still not quite at breakeven. But I guess I just wanted to dig into, like, how are you guys thinking about breakeven and I guess the recurring revenue side of the story? There's been some improved disclosures over the last couple of quarters. But is it -- are you focused on pre carried interest with carried interest, some of the gains in there or not? Like what -- how are you guys thinking about recurring revenue profitability in these alternative investment platforms? And then within that, we're still seeing, I guess, investment platform expenses continue to pick up. So is there still a lot of investment loss could do before that levels off?

[Robert Jeffrey Orr, President, CEO & Director]

So good question. The first thing we think about is separating the -- conceptually, the businesses as the general partners, i.e., asset managers and the seed capital that we have invested. So historically, at Power, we thought of it as a diversification strategy, but we thought of it as kind of 1 [ Valoc ], and we've been taking the steps to say, we have asset managers, they're general partners, and they have revenue and they have expenses, and then we have our seed capital that earns investment. So let's make sure we can -- we've separated those now from a corporate point of view internally and let's track those separately.And your question was around the general partner asset manager, and there are 2 streams of income, as you pointed out, there's a steady state fee income and then there's carry. The steady state fee income, the first stage is making sure we can get to breakeven on a steady state fee income where the steady fees from assets that are deployed in most cases -- Sometimes we get paid on committed, but typically, it's when the assets are deployed -- are equal to the expenses of the teams managing them, and you can start to breakeven and contribute. And that's steady state. And then you end up getting episodic or more sporadic carry as there are realizations in the portfolio or a certain return thresholds are met on existing funds.So we think of them in both ways and we separate them both. And there's predictable income and then there's less -- then there's the more sporadic income and carry. I think that's the way that the industry does it as well. They'll track it. And that's the way we're thinking about it. And as you can see, there's more assets in Sagard Holdings and a lot more third-party capital that is in there. So -- and we do look at the fees, by the way, that comes from the seed capital, like we pay fees on the seed capital to the platforms as we would if we put our money in a private equity fund to someone else their private credit fund. So that's part of the revenue and our net returns come net of that. So -- but there's more revenue in Sagard Holdings. They're much closer to breakeven on the basis that I just described than Sagard Holdings, but Sagard's making progress as well. Or not Sagard, excuse me, Personal, Power Sustainable Capital is making good progress as well. And, Greg, anything you want to add to my answer?

[Gregory Dennis Tretiak, Executive VP & CFO]

Yes. I think, Jaeme, if you look to our MD&A that we certainly have become more transparent about the sources of revenue and the expenses, so you'll be able to track it as we do. And obviously, you'll see there that management fees are separated from the carry. So that will give you some insight. But I'd also say to you that just in terms of our governance of both these platforms that -- just to reiterate, that they are being stood up as independent operations, and they have their own governance structures, and they have their own Boards of Directors, and they are managing to their profitability and governed by that -- those Boards in that respect, not that they're totally independent of us and they aren't working to a plan that we approve, but just to make sure that you understand that they have their eye on the bottom line as well.And of course, through the start-up phases of building out these platforms as they bring on and open up new funds, there will be a blip in the expenses until they do their first fundings. As you will see with the Canadian Private Equity fund that has just recently been launched. The team is on the ground, but they're already into finding their funding and hopefully having their first round of funding in the very new future. So that's the other color I'd add.

[Jaeme Gloyn, Analyst]

Okay. Great. So yes, expense was ticking up with total AUM and the management fees coming after those unfunded commitments start to get deployed is kind of the way to think about that. Great, appreciate the color.

[Operator]

And we have no further questions at this time. I'll now turn the call back over to the presenters for closing remarks.

[Robert Jeffrey Orr, President, CEO & Director]

Okay. Well, I don't really have any closing remarks. This was a -- we feel good about what's happening and we're enthusiastic about carrying on the strategies that we've been pursuing up to date. And I just want to thank you again for joining us on a Friday afternoon. I wish everybody a very good weekend and we will talk soon. Thank you very much. Operator, that's it for the call.

[Operator]

Thank you. This concludes today's conference. You may now disconnect.