Power Corporation of Canada

TSX:POW

Earnings Call Analysis

Third Quarter Highlights

Power Corporation's third quarter of 2024 showcased a compelling performance, buoyed by robust growth in its core businesses, Great-West Life and IGM Financial, which both saw a 12% increase in earnings per share year-over-year. The company's net asset value (NAV) also reflected this strength, increasing by 15% quarter-over-quarter to reach $57.92 per share. This continued growth momentum persisted after the quarter, with NAV per share climbing an additional 6% to $61.33.

Stable Earnings and Share Buybacks

Power Corp's adjusted net earnings from continuing operations were $542 million for the quarter, down from $1 billion a year ago, resulting in adjusted earnings of $0.84 per share, compared to $1.52 previously. However, the decrease was partially mitigated by a reduction in the average share count due to active share buybacks, contributing to a $0.02 improvement in earnings per share. The company remains committed to share buybacks, having repurchased over $120 million in shares during the quarter.

Performance of Core Businesses

Great-West Life reported base earnings exceeding $1 billion, marking the sixth consecutive quarter of base earnings growth. All four segments contributed positively, with year-to-date base earnings up 14% versus the previous year. IGM Financial similarly enjoyed strong earnings growth, with Power's share of its earnings increasing 12% driven by the wealth and asset management sectors reaching record levels of average assets.

Growth of Wealthsimple and Other Ventures

Wealthsimple, a significant component of Power Corporation's portfolio, continued its expansion, boasting a client base of 2.6 million and enhancing the breadth of its service offerings. The fair value of Power's investment in Wealthsimple increased by 46% at the IGM level during the quarter, reflecting the platform's promising trajectory. Additionally, Sagard’s general partner value grew by 39%, underscoring the sustained success of Power's alternative investment strategies.

Non-recurring Items and Future Sales Projections

While the quarter was marked by several non-recurring items affecting comparative earnings, the expected closing of the sale of Peak in the upcoming quarter, which is projected to yield a nearly USD 200 million gain, is anticipated to positively impact Power's financials. Furthermore, the earlier sale of Rawlings brought in approximately $83 million, providing further liquidity.

Outlook and Guidance

Looking ahead, both Great-West Life and IGM have provided guidance of 8% to 10% growth in earnings per share, signaling confidence in sustained growth trajectories. The company articulated its commitment to return cash to shareholders through buybacks and dividends, as it strategically reinvests generated cash into profitable avenues. GBL has raised its dividend baseline significantly, from $90 million in 2023 to $170 million for the following year, highlighting a strong commitment to shareholder returns.

Conclusion: A Positive Investment Narrative

Power Corporation's solid third-quarter results reflect its well-structured portfolio strategy and operational resilience. The mixture of consistent revenue growth in core segments, active share buybacks, and a favorable outlook positions Power Corporation as an attractive investment option. Its commitment to increasing shareholder returns, coupled with an optimistic earnings growth forecast, reinforces its value proposition for investors.

Earnings Call Transcript 2024-Q3

[Operator]

Good morning, ladies and gentlemen, and welcome to the Power Corporation Third Quarter 2024 Earnings Conference Call. [Operator Instructions] I would like to remind everyone that this call is being recorded on Wednesday, November 13, 2024. I would now like to turn the conference over to Mr. Jeffrey Orr, President and Chief Executive Officer of Power Corporation. Please go ahead, sir.

[Robert Orr, executive]

Thank you, operator, and welcome to everyone. Thanks for joining us this morning for our results call. With me is Jake Lawrence, who is EVP and CFO of Power Corporation, and we'll walk through the presentation and open it up for questions. Just draw your attention to the cautionary statements on Pages 2 and 3 regarding forward-looking information and non-IFRS information. I won't draw your attention to Page 4, which is our mugshots, but you can admire those later at your leisure. I'm going to walk right forward to Page 7, if we could, which is overall summary of the quarter.

Yes. So listen, I'm really pleased with the performance of the businesses across the portfolio of businesses in the third quarter. First of all, Great-West Life and IGM which are the producers of Power's ongoing and repeatable earnings each enjoyed strong earnings growth, 12% on an earnings per share basis for each of them year-over-year. They also contributed to strong increases in our net asset value and really great developments across the rest of the portfolio, what we sometimes refer to as the NAV part of the portfolio and a number of developments we'll talk about through the presentation including the sale of Peak, which is a substantial step in the monetization of our stand-alone businesses, progress at Sagard being recognized with a 39% increase in the value of the general partner recognized in the quarter. Wealthsimple continues to expand its client base in a very, very meaningful way in Canada and increased the depth and the breadth of the relationships it has with its clients.

So a big increase in the value of our stake in Wealthsimple. And it was offset with a couple of reductions in our NAV at the Lumenpulse and Lion, but overall, strong growth in NAV of 15% across the portfolio, and that's continued, at least in the public parts, which are visible since the quarter end, continued growth and strong NAV rate up through until -- through the month of October and November. So we're really happy about the quarter, excited to tell you about it. I'm going to then turn it over to Jake to walk through some of the financials in the NAV, and I'll pick it up in a few minutes. Jake, over to you.

[Jake Lawrence, executive]

Great. Thanks, Jeff, and good morning, everyone. I'll start on Slide 8. As Jeff noted, Power Corp reflected strong results, and it really came from our main operating businesses, Great-West and IGM Financial. And there was a few noncash items, which I'm going to detail in a moment. As Jeff reminded everyone, Great-West and IGM are our main earnings contributors. In this quarter, we're pleased to report the double-digit earnings growth from both businesses.

Adjusted net earnings from continuing operations was $542 million. That compared to $1 billion in the same quarter last year. I'll address the breakdown of these results on the following slide, but we'll note that both the current and comparative quarters include onetime items. On a per share basis, adjusted net earnings were $0.84, and that's compared with $1.52 in the same quarter last year.

We remained active buying back shares and the year-over-year reduction in average share count contributed to approximately a $0.02 improvement in our earnings per share. We've spoken about NAV a little bit. The adjusted NAV was $57.92 per share at the end of the quarter or September 30. That was up 15% compared to the end of Q2, and it does reflect growth, both in our earnings and NAV focused businesses.

As Jeff just noted a moment ago, the share price momentum in our group companies has continued post quarter end since our OpCos reported results last week, both Great-West and IGM, and our NAV per share as of yesterday's close was up an additional 6% to $61.33. Finally, it's worth noting this quarter, the Board of Directors declared a quarterly dividend of $0.5625 per share, and this is in line with what we had declared last quarter.

Turning to Slide 9 to break down the earnings. Great-West once again delivered strong base earnings of over $1 billion, with both momentum and growth from each of its 4 segments. I would like to highlight that this marks the sixth consecutive quarter of base earnings increases at Great-West and the 12% year-over-year growth reflects the actions taken by Great-West to support and accelerate their strategies to grow both in the U.S. and in Canada.

IGM Financial reported strong year-over-year earnings growth, and Power's share of its earnings were also up 12% with increased contribution from both wealth and asset management as these 2 segments each reported record ending average assets at the end of the period. GBL's results, they do have nonrecurring items in both the current and the comparative quarter from last year. In Q3 2024, GBL's portfolio company, Imerys, disposed of certain assets and as a result, recognized a noncash loss related to the reclassification of currency translation and earnings or CTA.

In last year's comparative period, GBL's contribution also included a significant gain on the deconsolidation of Webhelp following its merger with Concentrix. Moving to our alternative investment platform. Power Sustainable results were comprised of fee-related losses consistent with the prior year as well as some acquisition costs related to its newest investment strategy as well as Power's share of losses on its consolidated energy assets.

Sagard and Power Sustainable continued to deliver solid fundraising despite some headwinds in the alternative asset base with year-to-date having raised a combined $1.9 billion in new commitments. This quarter, we further refined our presentation by showing stand-alone businesses as its own line item while grouping corporate operations and other, which includes charges such as our operating expenses, financing charges, depreciation, income taxes as well as our dividends on preferred shares.

We believe this enhanced disclosure will help investors better see through our results. In Q3, the contribution from stand-alone businesses primarily included noncash impairment charges that Jeff referred to, and that was both at LMPG and Lion. I'll note that while we expect to generate a gain of almost USD 200 million on the sale of Peak, this will only be reflected in our P&L upon closing, which we expect to happen next quarter.

Now turning to Slide 10. Here, we break down the $57.92 of net asset value per share as at the end of the quarter. Our growth in NAV and our growth in NAV per share were headlined by the strong share price performance in our publicly traded operating companies, notably Great-West and IGM. Our alternative asset investment platforms also contributed to the NAV growth this quarter as the fair value increases of both Wealthsimple and Sagard's asset management business led to a roughly $400 million increase in Power Corporation's net asset value.

As Jeff mentioned, in addition to the announced sale of Peak this quarter, Peak also previously announced the sale of Rawlings. This generated about $83 million in proceeds, which we did receive during the quarter. The proceeds from the sale are reflected in the cash and cash equivalents line and the combination of this cash, the increase in Peak valuation and the impairments at LMPG and Lion essentially result in a flat contribution from the stand-alone businesses quarter-over-quarter.

Looking a bit closer at the balance sheet, Power's cash and cash equivalents ended slightly lower at $1.4 billion as we remained active in buying back shares this quarter. We transacted over $120 million of repurchases under our NCIB program.

Of this current $1.4 billion balance, approximately $1 billion is available cash when we consider dividends declared but not yet paid. And I'd also note that this $1 billion does not include the approximate $440 million of proceeds from the sale of Peak that we do expect to receive in Q4. They overall, we're pleased to report NAV growth that was driven by contributions across the portfolio. I'll now turn it back over to Jeff to continue the call.

[Robert Orr, executive]

Okay. Jake, thanks very much. So then I'll just dive in a little more on each of the pieces. And on Slide 11, you've got the earnings -- the last 5 quarterly base earnings and net earnings for Great-West Life. And I'd just point out, in addition to the 12% year-over-year for the quarter, year-to-date, the base earnings are up 14% from 2023 levels. And that's really been led by Empower but it is broadly based to pick up Jake's comment, if you look at it on a pretax basis, each of the 4 segments had earnings growth quarter-over-quarter from last year.

And -- but the minimum tax impacted the capital in the reinsurance segment in effect and also there were some tax noise on the Canadian segment, but all 4 segments were ahead from last year and continue to show strong growth. Also, importantly, on the return on equity, the company reported ROE on base earnings of 17.3%, which is above the high end of its targeted range and so really strong growth in the efficiency of the capital and the earnings on the capital. Just a page on Page 12. Diving a little bit into Empower a bit more. And this is a reprint of a slide, I think that Great-West had in their presentation last week. So you may have seen it already.

But just pointing out the Empower growth story, we continue and Great-West Life continues to be very confident in the thesis that we've had and in the strategy that we are engaging in. Some questions around the industry around is the DC industry mature? And is it in outflows? And the answer to that question is the D.C. market is mature, and it's in outflows.

And that's a core part of our thesis. But notwithstanding that, we believe we can create and have been creating strong earnings growth through a whole number of factors that we're playing on, which includes growth in market share organically, growth in market share through acquisitions. Other revenue drivers that are going on in the D.C. market as well as cost and efficiencies as you get scale. All of those are driving profitability in the DC market itself.

And then the Wealth Management opportunity that is being driven by the outflows that are coming from that mature DC market are growing even faster -- are creating even faster earnings growth in the Wealth Management segment of Empower. You can see that in the bottom right hand, that's certainly been the experience over the past 12 months. And we expect that, that will -- those trends will continue well into the future. So we remain highly confident in the Empower story and are feeling really good about the performance there.

I'll then -- just one small note on Page 13. Empower reported a small acquisition, but it just shows really what Empower is up to. The main acquisitions have been in increasing the DC footprint that they have, the MassMutuals and the Cruise, but they're also going to continue to look and be active in broadening out the breadth of products that they offer to their clients, and the option tracks adds a very important capability that we think will increase their competitiveness as they bid for new business.

Turning then on Page 14 to IGM. I think the overall story at IGM is strong performance by each of the 2 main core businesses in Wealth Management and Asset Management being IG Wealth Management, Mackenzie, great momentum in terms of earnings. We've got great momentum in terms of gross sales and importantly, the flows are turning in the business, which I'll come back to in a second. And then the rest of the portfolio, the strategic investments, all 4 of them performing really, really well.

So here on Page 14, you just see the industry flows. And although IG Wealth and Mackenzie play outside of the mutual fund business, this is just put here as -- there's good data on the mutual fund business. So it's more an indicator of what's happening more broadly in the Wealth Management market in terms of managed assets. And you see after a couple of years of big outflows driven by a number of factors, driven by high inflation pinching high interest rates pinching households and then some money going in outside of managed products into cash products and certificates of deposit.

You've got some of that starting to abate, and we saw in the fourth quarter -- or in the third quarter, excuse me, our return to positive flows and that's benefiting IG Wealth, which is getting -- is back in net flows from both an AUA and an AUM basis. And Mackenzie is having improvements but still in a negative flow position, but improvement in their net situation. But the main message on this page is that we're starting to see a turn in the industry flows. That would be a great thing, whether -- hopefully, it continues with the environment going forward, but we saw it, it was an important milestone for me and the way we look at it. 15, just picks up on my point about the strategic investments continuing to deliver.

We've got a slide later on Wealthsimple. So I'll just leave that one for there. But Rockefeller showing 33% growth in its client assets through a combination of organic growth new advisers coming on board and market. And so both, Wealthsimple and Rockefeller on the Wealth Management side were really strong growth. And then on asset the Asset Management side, China AMC 34% year-over-year growth in its assets. It's increased its share in a 1-year basis to 6.3% from 5% of the long-term fund market. Good momentum at China AMC, offset somewhat by some fee declines. So the earnings aren't growing as quickly as that, but the franchise itself in a very strong position.

And then Northleaf, and really a very difficult fundraising environment for alternatives, $1.5 billion of fundraising in the quarter, $4.8 billion overall. AUM has grown 21% compounded since we formed the partnership in late 2020. So great growth at Northleaf. Just on Page 16, a word on GBL. As you know, all of our companies in the past few years have come out with guidance, have been clear on their objectives, Great-West Life, IGM, Power itself.

Here's what we're trying to do. Here's what our strategies are. Here is our benchmarks and GBL did that last week with their shareholders going public with their goals and their strategies and gave midyear guidance. And basically, the strategy is summarized in this page. They're continuing to generate cash on the left side of the page and they expect to use that on the one part for reinvestment.

And as they do that, they're shifting the portfolio to more privates. And then the third element is we're also returning cash to shareholders through buybacks and through dividends. So that was articulated with some specific goals as to what they were trying to achieve and then importantly, if you recall, when we had this call last quarter, we reported that GBL had increased its dividend about 80%. I don't have the number exactly.

Power's share in Canadian dollars went from -- was $90 million in 2023, received in 2024, bumped by $80 million to $170 million for next year. And we were unclear as to whether that was going to be a onetime or whether it was a -- management expected that to be repeated and they clarified in their presentation last week that they expect that new higher level of dividends, which work out to EUR 5 per share is the new base level.

Obviously, dividends, as you know, are declared by the Board. It doesn't mean there will be a dividend declared next year, but their expectation that they communicated to the market is that new EUR 5 is a base level, and they look to grow it from there. So that was good news, and we were pleased to have that in the marketplace. I said I'd talk about Wealthsimple and I know IGM covered this, but just continued incredible growth of Wealthsimple. We've got 2.6 million clients. They've got multiple touch points with the clients have expanded the breadth of their offering. It started off as a simple wealth product for turning their name around.

They have -- but they've got 5 or 6 different products, and they continue to broaden the number of services they provide to their clients, the AUA is up materially year-over-year. And the mark on Wealthsimple was increased in the quarter by 46% at the IGM level in the way that they account that does show up in terms of their mark. We consolidate Wealthsimple at the Power port level, so we don't show the increase in fair value through our P&L. And so we -- it doesn't show up in the earnings, but it's obviously -- it's a very important mark on the growth and the success of the business.

And then just on -- as we turn to other parts of the portfolio, as Jake mentioned, we also increased the value in Sagard and our GP interest in Sagard. And you see based on a number of factors, but you see the funding and the growth in the assets over the last 5 years on Page 18. And that's really been a combination of fundraising, hiring new teams and launching new products and also M&A and acquiring new firms. So all the tools and the toolkit being used to grow the scale and the success of Sagard and the GP itself, the manager, the value of that was increased by 39% to about $800 million.

We own roughly half of Sagard. As you know, we've got partners in there, Lunate, Bank of Montreal, Canada Life as well as management. So Power stake is about 50% in the business.

Turning to Page 19. I think Jake went through most of Peak, so not too much to add. As I said, I think this is an important step in our continued monetization of the stand-alone businesses. This is a big one. And a very, very good return for Power, about a 3x multiple on the capital invested. We did that with our partner. And so this is just generally a great success story for the group and really nice to see it and looking forward to the cash coming in, in the fourth quarter.

Okay. Then with that, I'm going to also make a couple of comments on Page 20. Overall in our -- I'd just jump for -- yes. Okay. Then back to the Asset Management businesses, just a couple of words overall on the growth of the businesses. You've got on the left-hand side on Page 20, the overall growth of both Sagard and Power Sustainable. Those numbers -- that's funded AUM, different ways to measure the business. There's fee-bearing AUM, committed AUM and then it's funded. So that's a funded basis. And we talked about the growth and the value of the GP.

We also create value through the carried interest. And you've got $178 million at the end of the quarter of carried interest that has been accrued for the shareholders of our GPs. And again, we own roughly 50% of that most -- a lot of that is in Sagard, but some of that is in the energy infrastructure, as you see, and we own more of Power Sustainable. So our share of that is not 100%. But that's a -- it's a key value driver. It's growth in the GP growth in the carried interest. And then finally, on Page 21, the other value driver is we have about $2.5 billion of capital that are in the different strategies. And overall, we are expecting a return of over 10% in that capital. It's not all going to come every quarter, every year.

The fixed income type strategies at the top of the page, the energy, the private credit. They tend to be in the real estate tend to have cash flow attached to them and the -- obviously, the venture capital and the private equity have higher targeted returns, but the returns are episodic. They come as monetization. So they're not steady cash. But overall, we are looking for earnings and value growth through this part of the strategy as well.

All right. Page 22 is our continued question return shareholder -- capital to shareholders. Jake mentioned it. You've got $1.4 billion returned over the first 3 quarters, including dividends and buybacks. And I think Jake did a nice job of going through the cash position. So I don't -- I won't go through the second point on the page. And both S&P and DBRS reaffirmed our strong credit ratings over the last several weeks.

Page 22 is just a look at our total shareholder returns on a 1-year, 3-year and 5-year basis compared to a couple of the benchmarks that we follow, and I won't belabor that point. Page 24 is just a tracking of our NAV discount, and we're around 23%, 24% right now. And so we continue to view that as an opportunity for value creation. And we follow it. We don't influence it directly. We influence it indirectly, but the discount -- the strong share growth is there notwithstanding that there's still an opportunity on the discount.

And I'm going to finish up on Page 25. Just to say, we're very optimistic that our -- the tenets of our value creation strategy remain very much in place. The returns that you saw over the last 5 years a couple of slides further -- or earlier, I should say, have really been based on earnings growth and on NAV growth.

They haven't been based upon any material changes in the valuation. So the TSR story that has been created is notwithstanding that the PE multiples of Great-West Life and IGM really haven't changed over the period. You can -- when you look at where they're trading and you look at the fact that both Great-West Life and IGM have given guidance of 8% to 10% growth in earnings per share, and you compare that to where earnings per share are and where the stock prices are, you're going to see the multiples are pretty reasonable and very reasonable and haven't really changed at either company. Our discount hasn't changed too much.

So the story of the returns we produced are not because of a reevaluation of Power Corp or our subs, it's through earnings growth and NAV growth, and the components of our strategy that are -- that we put in place 5 years ago remain, in fact, have been validated, and we continue -- we're growing and have continued to grow in our confidence that we can execute on this strategy, and we're looking forward to doing so. And looking forward to the future here. So with that, I'm going to close the comments and open it up, operator, to participants on the line who want to ask questions.

[Operator]

[Operator Instructions] And our first question will come from Nick Priebe of CIBC Capital Markets.

[Nikolaus Priebe, analyst]

Just in light of the Wealthsimple markup, I wanted to ask about the ownership dynamics. So the Power Group controls a large economic interest, but there are also third-party LPs that would participate through the Portage Venture capital platform, and they've done very well in that investment. Do those LPs want to see an exit to crystallize returns? Or how mature would that investment be relative to the targeted hold period for that fund? I'm just wondering how those dynamics might inform or influence the timing of a potential public listing or other exit event.

[Robert Orr, executive]

Thanks, Nick, for your question. And it's a good question. Just as a point of clarification, most of the LPs that came into Wealthsimple are not through Portage. The interest of our group is through Portage, but most of those investors came in, I think it was 2021 in a treasury offering as well as the secondary that Power Corp and IGM participated. There was a lot of demand. And we -- as you know, we sold some of our position at that point. So those are institutional investors, VCs, whose list of really tech players and fintech players around the world.

And as you can imagine, they've invested into a private company and they will have abilities to have liquidity going down in the future. That's -- you're asking about timing. I don't have a good view on timing at this point. I don't sit in their seats. And I don't have the shareholders' agreement in front of me, but they did come in, I think it was in 2021.

The valuation at that point, that was right as fintech valuations were peaking, and they came in at a $5 billion valuation. If you followed the story, fintech values came off quite dramatically in 2022 and the positions of Power and IGM were marked down. And now we've marked them up several times, and we're back to the $5 billion valuation. So one way to think of it is when you think about when would they -- I'm now getting into the heads of the investors, which I probably shouldn't do, but I'd just point out that the value that we just marked it back to is equivalent to the value that they came in at 3 years ago.

So I can -- maybe that helps inform how they might be thinking about it. But eventually, there will be liquidity discussions in the future, and we'll need to deal with them at that time. I'm not sure I can be more specific, and I hope that answered your question.

[Nikolaus Priebe, analyst]

That's actually very helpful. And then just switching to the asset manager. I want to touch on the pair of themes in the alts space more broadly. So number of alts players are talking about the prospect of an improving demand environment for private market capabilities because of this easing denominator effect, better rate stability, better capital return. That would be a benefit to your platform.

But a lot of the larger alts players have also been highlighting how LPs want to consolidate the number of GP relationships they have with a narrower focus on large platforms with broad capabilities. I just wanted to get your take on that and what you're hearing in your dialogue with LPs as it relates to those themes.

[Robert Orr, executive]

Those are both themes that we would agree with. The easing rate environment, growing confidence in markets, all of that there's an expectation that's going to play into a more active M&A market, more liquidations for PE players, which then will put to work also some of the funds that they've raised and that will kind of unlock some of the, hopefully, future fundraising but also realizations. So starting to play out, and it's hoped for, but we'll see how that plays out. I would expect it would be with the enthusiasm in the market and the economy right now, but we'll see how it plays out.

On your second point, that is definitely a theme. You've got consolidation going on around the major players. So the very large alt players are well positioned for that. The top 5, I think, are getting something like 50% of the funding. I'm not exactly sure what that period is, but I've seen that figure quoted a number of times. There are hundreds, if not thousands, of alt players. It doesn't mean they're all disappearing.

It does mean that you've got to be -- if you're a smaller player, you've got to have a very attractive lineup of funds and you've got to have good returns, and you've got to position yourself with your LPs in a way that you're bringing value added to them and we can walk through ours as to why we think we have differentiated strategies. We do have very good returns.

We have very good products. We've got differentiated products. But there's no question that there's some consolidation that's happening in the industry as to where funds are going. We're well aware of that. So I'm not sure I can again add much more than that. That is for sure a force going on in the market.

Anything that you want to add?

[Jake Lawrence, executive]

Yes. Just, Nick, what I'd add on to the second point is it's part of using Sagard as the example. In the past 12 months, roughly, they wanted to add in capabilities to become more of that one-stop shop. So in addition to their core products, they added in the capabilities of performance equity management around retail funds of funds, some secondaries. And they've also added in some capabilities in the collateralized loan obligation space or CLOs with HalseyPoint. And so that's complementary to existing credit, fixed income real estate products and broadens out the product set.

At the same time, it brings in from those acquisitions, customers and GPs and allocators they haven't dealt with before to now cross-sell some of the more historical Sagard products into. So we definitely see that theme and we're trying to act on as well strategically.

[Operator]

The next question comes from Graham Ryding of TD Securities.

[Graham Ryding, analyst]

Maybe I'll stick on the alternatives theme. Just within Sagard, I believe you recently opened up your private credit funds as sort of the retail wealth channel. So maybe just some color on how exactly are you going about that? Are you in targeting both Canadian and U.S. channels? And then just -- how much of a priority is that broadly for your alternatives platform, what strategies would maybe make sense? And how do you go about that process?

[Robert Orr, executive]

Yes. On your -- on the broader question, the group has been pursuing in the alts space, bringing alts to different markets, bringing it to the wealth markets, bringing it to ultimately the retail markets. The partnership, in fact, with Northleaf at IGM struck going back to 2020 was all about that.

And so that's showing up in various ways across our platform, and I could talk some more about that. But the alts are finding their way into individual products through multi-asset products, through defined contribution channels, through retail channels through individual funds. And so that is broadly a theme, and it's an important theme and all the alts players are on it.

The institutional market and the family office market were the main players in alts going back over the last 15, 20 years. They've got quite full allocations. The drop in -- at one point or the increase in the fixed income -- or excuse me, decrease in the fixed income market on a lot of those allocators when interest rates went up, in fact, found them to be over allocated because the -- all of a sudden fixed income assets were -- basically, the change in the asset allocation is just through market.

So that exacerbated it. And where the flows are coming in the future are going to be increasingly in retail wealth management channel. So that's a broad theme, and our group has been active across the board. And private credit is simply one example of that. Private credit is finding its way into products.

Wealthsimple has got some retail products that have different forms of retail products. Some of it is in that channel, but they're also going across our channels, looking for distribution opportunities. And by the way, not uniquely, our distribution channels, we'll look to where we have ownership in the Asset Management space, be it in Sagard or Power Sustainable Capital or Northleaf or our partnership with Franklin Templeton for example, but also, of course, looking more broadly than that, it's not just uniquely products that we're producing. So it's a big topic, a very big topic.

[Graham Ryding, analyst]

Okay. So yes. Just to sort of maybe summarize a little bit for Sagard and Northleaf, it sounds like you are looking to leverage your channels through IG Wealth, Wealthsimple and Rockefeller. Or is that a channel that has potential to be leveraged as well?

[Robert Orr, executive]

Rockefeller, Empower, lots of channels here. We've got -- Great-West itself got 3 -- well, across the group, we'd be over $3.5 trillion of assets on the platforms, right? So there's lots of distribution, and that's not counting when we wholesale onto other people's products -- other people's channels. So it's across the board, we have our teams working to look for distribution opportunities. And the platforms, the distribution platforms are looking for differentiated product. And obviously, the asset managers are looking for distribution.

[Graham Ryding, analyst]

Okay. Great. We don't often talk about GBM, but you did touch on it in your presentation. With the strategic update last week, provided by GBL, what are your thoughts? Is this the right strategy to get a shareholder return moving in the right direction for this asset?

[Robert Orr, executive]

So I think the answer to that question is yes. GBL has been on a strategy for a few years of returning capital to shareholders, effectively reducing -- not abandoning, but reducing their exposure to public markets and we're going more into private assets where they think they can get greater value creation and recognition. And in the meantime, not taking all of the cash you're liquidating but returning some of that cash to shareholders. That's been through buybacks given their NAV discount, that's been a smart strategy.

We haven't participated, neither we nor the Fair family have participated in that. But now they're turning with the cash they're generating to increasing dividends, which is, I think, a great thing for us. So we'll receive more cash from that. So overall, I think the strategy is good for value creation. Hopefully, value recognition and, over time, recognizing and narrowing the discount and then in producing more cash for Power. I think it's all in the right direction. So the answer to your question is yes.

[Operator]

Next question comes from Jaeme Gloyn of National Bank Financial.

[Jaeme Gloyn, analyst]

I was hoping you could just provide a bit more color on the increase in the Sagard fair value and the drivers of that.

[Robert Orr, executive]

Yes. So the drivers of that are increased -- they're multiple, increased assets under management, strong performance in the funds, increased breadth, launch of second funds in each of the strategy. It gets a little technical when you get into trying to value or when it's valuing an alternative asset manager when you have fund that is a first vintage, you have one discount rate as you have success in that fund and you launch a second product.

Evaluators in the space will then drop the discount rate because you've now proven that the product has been successful. Your investors have had a good experience. They rolled into a second fund, and now you don't have a first fund, you have a franchise, if I can use the word loosely in that area.

And so an increasing portion of Sagard funds are on to their second vintage and the discount rates have come down. So you've got a combination of growth in assets, growth in revenue, good performance and more maturity of the strategies in place and lower discount rates and that all turns into a valuation -- a higher mark on the valuation. Anything you want to add to that, Jake?

[Jake Lawrence, executive]

So they've added in more capabilities I referred to earlier. So the last time evaluation was done, the Performance Equity Management and HalseyPoint interests weren't in there. So that's also increased the value of the entity.

[Robert Orr, executive]

So that's -- those are the main drivers, yes.

[Jaeme Gloyn, analyst]

Also, I think about the -- sorry, did you want to add something?

[Robert Orr, executive]

No, I didn't. No. Go ahead, Jaeme.

[Jaeme Gloyn, analyst]

Okay. I was just going to ask about the capital deployment and sitting on excess cash of, call it, $600 million above your base cash holding levels. As you continue to do more buybacks, maybe talk through the dividend as well. It looks like it was on hold this quarter. And how you're balancing those 2 uses of capital?

[Robert Orr, executive]

Okay. Great. Good question. Thank you. So no change in our approach to share buybacks. That's going to remain the priority with our excess cash. As you know, the receipt of cash can be a little sporadic. And so we don't necessarily get a bunch of cash in and go and kind of spend it all in one quarter. We try and be a little more systematic about it than that. So that we can be in the market on a more continual basis. So that's the way we look at buybacks and no change in our approach to buybacks.

We just have a lot of receivable a lot of cash here in this particular period. Your question about the other key component of returning capital to shareholders is through dividends. And on that, we really flow through the dividends that we receive from our 3 principal public companies. So our -- the way we think of our dividends that we pay out, we pay out dividends from what we consider to be consistent sources of inflows, not from the inconsistent sources of inflows like we monetize Peak or we have a realization on one of our private equity positions.

So the way to think about that is we take our Great-West Life dividends, our IGM dividends and our GBL dividends, we deduct our operating costs and financing costs, and that's a flow-through of those dividends. Because the last time that -- we haven't had a dividend increase that's come through in cash. The last time that was when Great-West increased its dividend that they announced back in February.

And so that was an increase in the dividends received and that resulted in the -- when they announced at February and March, we announced an increase in our dividends flowing that -- anticipating receipt and flowing it through. And I don't see any change in that. So that's a long way of saying we've got -- our dividends will increase when we receive higher dividends from those 3 subs. Hope that's clear. I don't know if that answered your question.

Operator, I don't see any other names on the question list at this time.

[Operator]

Yes. We have no further questions at this time. So I'll turn the conference back over to Mr. Jeffrey Orr for any closing remarks.

[Robert Orr, executive]

Okay. Thank you. So again, thank you, really excited about the quarter and lots of momentum building in the businesses. And with that, I'm going to thank everybody for participating in the call. We look forward to speaking to many of you in the weeks and months ahead. Thanks, everyone. Operator, that's it.

[Operator]

Ladies and gentlemen, this concludes your conference call for today. Thank you for participating, and you may now disconnect your lines.