Start Time: 08:30 January 1, 0000 9:41 AM ET
Power Corporation of Canada (OTCPK:PWCDF)
Q2 2022 Earnings Conference Call
August 08, 2022, 08:30 AM ET
Company Participants
Jeffrey Orr – President and CEO
Gregory Tretiak – EVP and CFO
Conference Call Participants
Geoffrey Kwan – RBC Capital Markets
Graham Ryding – TD Securities
Nikolaus Priebe – CIB Capital Markets
Doug Young – Desjardins
Tom MacKinnon – BMO Capital
Operator
Good day, ladies and gentlemen. Welcome to the Power Corp. Q2 2022 Earnings Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for a question. [Operator Instructions]. I would like to remind everyone that this call is being recorded on August 8, 2022.
I would now like to turn the call over to Jeffrey Orr, President and Chief Executive Officer. Please go ahead, sir.
Jeffrey Orr
Thank you, operator, and welcome everyone to our Q2 results call, and Happy Monday morning to all of you. I’ll kickoff the call here on pages 2 and 3. We have our disclaimers on forward-looking information and on non-IFRS measures. Page 4; with me today is Greg Tretiak, who is EVP and Chief Financial Officer of Power Corp. And between the two of us we’ll go through the presentation and answer your questions.
Page 6, just a reminder of various sources of information that you can look through that have been recently released by either Power or our three principal operating public subs, and you can reference that material at your leisure. And then I’ll start my remarks focusing on Page 7.
So I think two key highlights from our perspective for the quarter, really solid earnings in what was a pretty challenging environment. Obviously, we have — a lot of our earnings across different parts of the group are tied to market levels. Markets were shaky. Flows were negative in certain parts of the industry and in certain, both in Canada and other countries.
So challenging environment, but on the two main earnings drivers for Power Corporation being our interest in Great-West Life and IGM, really solid results. Great-West Life, really the diversification of its business, the strength of those businesses performed well, and offset a lot of the market weakness which was most pronounced in our results and their results in the U.S. businesses. And then IGM continuing to roll along with its business strategy and showing good results in a challenging environment.
The second point from my perspective, and this was really a quarter really focused on execution. So in previous quarters, we’ve come along and said, hey, we did two deals or three transactions. We’ve done a lot of transactions over the last couple of years. The group is heavily focused on execution, not to say we’re not focused on what could — other deals and other transactions in the future.
We’re always focused on it, but everybody’s got their head down focused very hard on executing the strategy, as we’ve already articulated. It was most pronounced in the U.S. with progress made in Power. Again, IGM continuing to move forward, GBL executing on its strategy in the face of difficult markets, continuing to fundraise at the platforms, and then we continue to return capital to shareholders. So those are some of the themes; solid earnings results and execution.
Page 8, we could have picked a whole bunch of slides and examples. You all live it. But on the left-hand side, really challenging markets and the S&P, I think it was down to June 30, I think it was 21%. It looks like it’s about 20% on that. I got 21% from Jan 1 to June 30 in my head. And also the Barclays Agg, so the bond market, fixed income market down 10%. So it’s been a long time since we’ve seen those two act in that way. And so investors really got whacked in the face on both the fixed income side and the equity side.
And on the right-hand side is just one example. Those are Canadian mutual fund sales. So we are certainly in a lot more markets than just that, but it’s a very concrete example. You’re looking at the second quarter mutual fund flows for the last 10 years in Canada. And this is the worst quarter Q2 on record. I think if you go back in history, this is the worst quarter that the industry has suffered certainly from a gross dollar point of view. So challenging environments on the market side of the business.
Greg, I’m going to turn it to you to walk us through Page 9 and the next few ensuing pages. Greg?
Gregory Tretiak
Great. Thank you, Jeff. I’m going to go straight to Page 10 where we have a little more color on the results for the quarter. And so, as you noted, challenging environment, but delivered solid results from the operating companies. I’m going to go basically down the page on the right-hand column and just give you a few points on some of the significant items here.
So first, starting with Great-West Life, as you alluded to, Jeff, a diversified business mix that delivered in this environment. Great-West Life’s insurance businesses across all geographies were strong and offsetting some of the market-induced weakness in the wealth and asset management businesses.
IGM was basically right on cue to ’21, with the exception of the mortgage business was a little softer and seed capital marks that management referenced in their call last week. Otherwise, the earnings would have been right on last quarter. GBL, we’ve tried to enhance some of the disclosure and give you a bit more insight into that business.
Their management focuses on cash earnings and dividends, in addition to NAV, but principally they’re focused as a key performance indicator where their NAV is traveling, of course, and they had a negative $44 million contribution to us in the quarter. And that reflects some impairments that they took on their tech book in the quarter.
Down the page, alternative investment platforms, as well we’ve enhanced the disclosure. I think hopefully you’ll see those changes. We do cite one of the big reasons for the change in contributions quarter-to-quarter primarily being the China public equities portfolio where this year we realized losses on the portfolio, whereas last year, at the top of the market, they were harvesting some gains.
So those are reflected in the results. But I would — in the appendix of this particular presentation on Page 33, there’s a significant amount of detail on the alternative asset investment platforms, both Sagard and Power Sustainable, that I would invite you to take a look at over the course of the next couple of days.
In the corporate operations and others, two points to make. Operating expenses, our run rate is about $35 million, which is in line with our post synergy targets as we completed our $50 million synergy targets. So it’s running right in line with where we expected it to be. The $76 million number is lower than you might expect, and it includes a $17 million net gain, which is associated with certain options that were designated as cash settled in the quarter. So you would have probably been expecting something a little higher. So just point that out.
And with that, I’d just flip over to the next page, which is Page 11, net asset values. Certainly, our net asset value is reflecting the market environment down from March 31 $49.92 down to $41.49. And just to note that almost 90% of the portfolio is actually mark-to-market. So certainly that is reflected here.
And with that, I think I’d turn it back to you, Jeff.
Jeffrey Orr
Okay. Thank you, Greg. So I’m going to move forward to Page 12. And we’ll just pick up a few highlights within the company’s [indiscernible]. But key message at Great-West Life is at the Empower management of its three acquisitions over the last couple of years are on track.
MassMutual is the furthest along in terms of its integration. And they are tracking very well. Management reaffirmed that they’re going — expect to hit their synergy target on the expense side, and revenue retention is actually tracking ahead of their own models. There are six of the eight waves that have already been completed and they’re on track to complete all eight by the end of the year. So MassMutual is moving along well.
Prudential closed during the quarter, so that’s great, and add significantly to the position of Empower in the D.C. market. And then the Personal Capital work continues and the tools of Personal Capital are starting to be rolled out both within the core D.C. program, so 8.5 million of the participants are now starting to get Personal Capital tools, including messaging tools.
So we’re enhancing the experience of participants as well as those tools being incorporated into the retail wealth management strategy of Empower on the retail business where effectively people roll out of their D.C. plan on retirement or when they change jobs, and of course Empower has got a strategy to try and capture an increasing share of that. So really good progress and feel very good about all of the original goals that we have announced at the time we announced those transactions.
Page 13. IGM, overall, I talked about the results. I think really focusing on the strength of the IG Wealth Management business is the core point I’d like to highlight. We have talked about it for a number of years how there’s been a lot of investment into that business. Things have changed. It’s been a multiyear journey. And we felt we had good momentum building. And then this difficult first part of this year and through the second quarter and into July, the flows at IG Wealth continued to be really, really strong, which is just great news.
And on this page, just to highlight a bit of that on the left-hand side was a slide that IGM used in their presentation. But new client flows from new clients continue to grow. And they are attracting clients to the platform at an increasing rate. And it’s coming across different wealth bands, including mass affluent and higher net worth clients contributing. And the redemption rate on the right-hand side continues to be very solid, as you’ve got advisors basically very pleased with the platform and new advisors joining the platform.
I think IGM in their call highlighted some of the marks that they’re getting on the different surveys of advisors and on how well the IG Wealth platform has been rated by advisors. And so lots of good stuff happening. We’re really pleased with the progress they made at IGM and with IG Wealth, in particular.
Greg mentioned GBL, a lot of the earnings was related to marks on their private investments in the tech sector. But they’re continuing to execute on the strategy and made a couple of big acquisitions in the healthcare space during the quarter, continuing to make a rotation and returning capital to shareholders. Their dividend is actually up this year and they’ve announced for May 2023. So they are — the cash earnings we’re getting from GBL continuing to increase notwithstanding the noise around some of the private marks.
Okay. I’m going to flip here over to Page 15 and just talk about what we’ve actually done to try and lighten the capital intensity of our model and create cash. At the time that we announced the reorganization and subsequently we put a lot of focus on the standalone businesses as being a source of capital that we could liquidate, a lot of questions were on it. And that’s the way we were thinking at the time.
But as we’ve reflected on our activities, we’ve actually been looking to realize and monetize assets wherever we can as we move to a work capital-light model. And the standalone businesses actually have been less of a source of capital than we would have anticipated for reasons I’m happy to discuss. But it doesn’t mean we didn’t have other tools in the toolkit.
And so what you’ve got on Page 15 is an example of a series of transactions, the most notable being having an opportunity to sell our interest in the Sagard 3 fund, some money we took off the table at Wealthsimple, of course. But you go through here and you’ll see about $1 billion from the start of 2021 through to 2022, and those are pre-tax numbers.
And then another — the cash we’re going to get pending the sale of CAMC to IGM being another source of capital that is still in cash that has not closed at this point. So we’ve been taking a lot of steps here to monetize assets. This is not a reconciliation. We actually do invest in the platforms and in the seed capital. And so this is kind of — but this is more an example of the action steps management has taken to create cash.
And then on Page 16, just kind of adding it up going back to the same 2021, we returned $2.4 billion of capital to shareholders. Obviously, the dividends are the biggest part of that, 1.9 billion. And that was also impacted by the dividend increase we announced last November.
But also the buyback program, we bought back about 2% of the participating shares, 2.4% of the public float, $511 million. And the bulk of that, of course, is in 2022, because we were not active really in 2021, as all of you I think are aware. And at the bottom of the page is just a statement of our current cash position. So that’s a little different perspective on what we’ve been up to.
Page 17, speaking of the standalone businesses, they’re continuing to make good progress. Lion, you got some talking points there. Even though the capital markets are less keen on the electric vehicle space, Lion continues to make good progress in building out their business. Lumenpulse has been affected by supply chain issues quite a lot over the last year and a half, but their business remains very healthy.
So we’ve said all along right from the time we announced the reorganization, we’re going to support the growth of these businesses. We’re going to do what’s right for the businesses. We do not have a gun to our head to have a deadline by which time we need to realize value. We’re going to do what’s right for Power Corp. and our shareholders.
We’re going to do what’s right for the partners, the other shareholders in those businesses and the management teams with which we partnered prior to us changing our strategy in late 2019. And we continue to support these businesses. And ultimately, we will realize a good value for Power Corp. when the time is right and most opportune.
Okay. So I’m going to carry on then to Page 18. Greg mentioned, there’s — we continue to enhance our disclosure. It’s a work in progress. But we’re just trying to continue to get greater clarity on these businesses. And you’ve got some disclosure on the P&L here, including fee-related earnings for the businesses, which is down in the lower left-hand corner in the third line.
So that’s basically — the fees not including carried or performance fees, basically the management fees, less the expenses, there is a little bit in the Sagard line where we have 4 million of pre-tax profit there. There’s some one-times in there. That’s probably thinking of that business more as running at a break even at this point. And then as Greg mentioned, you got some negative carry going on during this quarter.
And we are also trying to put emphasis — on the lower right-hand corner, you get the AUM and then you get the AUM which is funded and unfunded, and you also see the Power Corp. portion of that. But, of course, the fees are not on the AUM. The fees are on the fee-bearing capital. Sometimes — so there’s some funds that have been committed that have not been put to work yet.
There’s also on some of the, like the private equity funds, you get paid on the initial amounts, not the carrying value. So the fee-bearing capital is the one that’s most important when you’re looking at the fee line, and you’ve got that on the last bullet point. The overall message here, businesses are continuing to make good progress and we’re continuing to try and enhance our disclosure to get greater understanding for all of you.
On Page 19, continued good fundraising notwithstanding the difficult market, continued good progress. Power Sustainable closed sustainable agri-food private equity fund in Canada. Sagard is up to 400 million on their Canadian private equity fund and Portage was launched at a late-stage fintech fund, which is just in the initial capital raising stages. So good progress there.
Continuing on with the businesses on Page 20, the original capital that Power put in the China strategy back in 2005 is now the seed capital in our Power Sustainable China strategy. And this is just to say, notwithstanding a weakness in the Chinese markets and similar losses that we took on realizing positions during the quarter that Greg alluded to the capital we’ve had in this strategy has been a very good one for Power Corp. over many, many years. And it’s not just because the market has done well, the team has outperformed the market, both in their security selection and in their asset allocation decisions.
And I move to Page 21. Just to comment on our fintech strategies, attention around we’re taking — group’s taken a breakdown on its Wealthsimple position. Just reiterating, we’re just delighted with our fintech strategy. As we’ve said many times, the strategy started back six, seven years ago, and it was primarily to get our group on top of what was happening with technological change, make sure we knew where it was coming from, we had visibility, and we were on top of it, and our operating management teams were on top of it. And this has been a huge success. That’s a subjective point. But from the point of view of senior leadership for the group, it’s worked well.
We made two significant investments; Wealthsimple and Personal Capital, where we put more significant amounts of money in and we’re delighted with the outcomes of both of those businesses. And then Portage was really our main window into what was happening in about five different verticals around the financial services space that we cared about around the world. And that has not only done well for its shareholders and for the other LPs, but it’s also succeeded in getting our group and other LPs, by the way, really up to speed and on top of where technology is impacting financial services. So very pleased at what we’ve been creating in our fintech strategies.
And then just to comment on ChinaAMC, it has continued to build its business in a difficult market and grew its assets over the first six months of the year, and has been really driving its profit forward, its assets forward, really good progress at ChinaAMC. The business is doing well.
And then on Page 23, a comment on the discount. We have continued to say that as we execute our strategy and communicate what we’re doing and simplify our model and get the market to understand the value drivers that we should be able to narrow that discount. And we continue to make good progress. It doesn’t always go in a straight line depending on — you get bumps in the market from time to time, but that continues to drop and we continue to believe that that’s an additional source of value as we continue to execute.
Through all the market turmoil, what’s been going on in geopolitics, et cetera, almost like the ESG agenda has been taken off the front page of the papers, Page 24, but of course it’s still there as it should be, and our companies continue to be very focused across the board on moving forward on the various ESG initiatives that touch pretty well every part of our businesses. So just to note on that.
And then I’ll wrap up on Page 25 to say we haven’t changed our strategy. We’ve got a playbook. We’re following it. The theme right now is execution-execution. We’ve got lots of opportunities to continue to drive forward. But this is the playbook that we’re following. And I’m pleased with the progress that we have been making.
So with that, I will stop the formal part of the presentation and we can turn it to questions. So I would ask the operator to open up the lines for questions from people who have questions. Operator?
Question-and-Answer Session
Operator
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions]. The first question comes from Geoff Kwan of RBC Capital Markets. Please go ahead.
Geoffrey Kwan
Hi. Good morning.
Jeffrey Orr
Good morning.
Geoffrey Kwan
My first question was on the ChinaAMC deal. If I recall when the deal was announced at the start of the year, the expected closing was sometime in the first half of this year. IGM mentioned last week that it may be more late than this quarter, maybe even slipping into Q4. So just wondering what’s changed that’s causing the delay for the deal from being completed? And what is the likelihood that the deal may not even get approved?
Jeffrey Orr
Yes, so good question, Geoff. You’re quite right. We had anticipated that we would be closing earlier. And the cause of the delay is changes — different waves of changes in regulations in China that have caused re-filings — basically information that was provided on the basis of the rules that existed at the time that we announced on June 5, then changed a couple of times. And it’s just the nature of the beast [ph]. There’s a lot of change that goes on in their regulation. So we’ve had to provide new information and re-file it. Nothing to my understanding, and I’ll ask Greg to confirm that was at all specific to this transaction or to us or to ChinaAMC or to IGM or Power, nothing specific related because of us. It was just the rules change. And all of a sudden, what we found originally was no longer adequate. We had to file different information and that’s taking time. And I think there’s still some filings that are pending. Greg, do you want to add any color to that? Did I answer the question accurately, or did I miss something?
Gregory Tretiak
Yes. I thought you’ve got it. There was a change during the Chinese New Year that I don’t think anybody expected. So that came out after everybody returned from Chinese New Year, and there was a new regulation or a new set of regulations. And then later in June, there was an addendum to it. And so it is part of the regulatory regime’s changes to modernize its regulation with respect to asset managers in the country. As you know, there’s been a lot of change in China with respect to opening up its financial services market, and this is just part and parcel of that. So I don’t see anything that is preventing us from moving forward on the transaction.
Geoffrey Kwan
Okay. Are you able to elaborate like what was the regulatory changes, not to mention there’s an addendum?
Jeffrey Orr
Greg, I’ll let you take that to the extent you want to.
Gregory Tretiak
Yes, they’re quite elaborate. Their filing requirements with respect to the type of filing, the amount of information, the financial statements that have to be filed, it’s quite a laundry list, Geoff.
Geoffrey Kwan
Okay.
Jeffrey Orr
It was very technical in nature.
Geoffrey Kwan
So I gather. Second question — the other question I had was just how do you think about in terms of the co-investments that you have in your strategies as LP investors, do you kind of think of it in terms of whatever strategies that we do wind up launching the alternatives platform? This is kind of the ballpark percentage commitment we want to make, or is there perhaps like an aggregate dollar amount you want to commit to this part of your business?
Jeffrey Orr
That’s a great question, and one that we spend a lot of time talking about amongst ourselves and with the platforms. So the answer is, and I’m not trying to be evasive, it depends. So when you launch a new product and it’s the first time a strategy has gone out, the sponsor being Power Corp. is expected by the third party investors to show a real commitment. So think of Portage 3, the first fund we needed to be a big investor to get it off the ground. By the time we got to the third fund, the LP community, the investor community didn’t really need power to put a lot of money in, in order to launch a third fund. The fund’s track record spoke for itself. So an initial fund requires more capital commitment. That can be different, whether it’s an equity fund or whether it’s a debt fund, and what’s the track record of the investment team? Then when we come at it, our overall goal would be to minimize our capital commitment. Because I don’t know how much, notwithstanding all of our efforts to articulate that we’re going to get good returns and have got good returns on our LP commitments. I don’t know how much the market fully values that relative to investing in things that produce earnings. And so we are committed to — we think we’re going to get good returns on the capital and we’re building the business out to get to profitability. But we’re trying to minimize our capital commitment while we do so. And so that’s kind of the discussion that happens every time there’s a fund launch. And the more there are new products that they introduced, the more we are asked to put some capital in. We’re trying to run it so that we are not over time here going to be putting more capital in. We’re trying to run it on a pretty balanced way. But it goes through some waves. At times some years you’re putting in and other years, you’re taking more out. So, Geoff, I don’t know if that’s giving you a sense of it. I think bottom line is that we’re supporting the businesses to grow and we’re putting capital in to support the platforms, while we’re at the same time trying to minimize our capital position and change our mix, if you will, at Power Corp. to have more — at the margin, more earnings driven and less NAV driven businesses as we go through time here.
Geoffrey Kwan
Okay, that’s perfect. Thank you.
Jeffrey Orr
Thank you.
Operator
Thank you. The next question comes from Graham Ryding of TD Securities. Please go ahead.
Jeffrey Orr
Hi, Graham.
Graham Ryding
Sorry, was on mute there. Apologies. Good morning. Just with the ChinaAMC, assuming the deal does go through with IGM, 575 million in cash proceeds pre-tax, what would your plans be there for that? With that be sort of further support of your share buybacks, or how should we think about that?
Jeffrey Orr
Yes. Good question. Do we have the number disclosed, Greg? I have the number in my head. I just don’t want to get ahead of our disclosure. The after-tax number, have we disclosed what we think that is in terms of proceeds? I thought we had?
Gregory Tretiak
Yes, I think it’s about 60 million is the tax.
Jeffrey Orr
515, got it. I knew the number. I just didn’t want to get ahead of our disclosure inadvertently here. So 515 is the after-tax proceeds, Graham, is what we’ve estimated. And the answer is we’ll look at it at the time. What we are always doing is trading off, buying shares back which financially is attractive for a number of reasons. And that is our go-to playbook. But we’re also looking at different opportunities from time to time. And our subs are looking at different opportunities from time to time. So we’re trading off — the go-to playbook is managed to our minimum cash level and buy shares back, but we’ve always prioritize buying business either supporting our principal subs and something that they might want to do, or some opportunity came up at the Power level that was financial services. Those would be priorities over buying shares back. But I don’t want to create expectations in answering your question that way. I’m just stating that would be our priority. But in the absence of that, buying shares back would be the go-to playbook. I hope that answers the question.
Graham Ryding
Yes, that’s helpful. And you’ve been active with your buybacks year-to-date. Is that a reflection of you just feeling like you’re sitting on some excess capital, or in addition are you on the view that your shares are undervalued or is it because they’re trading at a discount to NAV you just think that’s a worthwhile way to deploy capital?
Jeffrey Orr
I would say that we’re just following what we said we’re going to do. And why that makes sense is the second part of your question. In terms of buying back, it wasn’t so much that, Oh my goodness, the markets down, we should buy some shares. As you remember, through 2021 and going all the way back to COVID, we had stopped aggressively doing buybacks. Like we had a minimum program and tried to manage dilution on options. And we were being super cautious through the COVID period, until ultimately our major source of cash, which is dividends from Great-West Life when OSFI basically in the fall said, okay, the restrictions on dividend increases are pulled off financial institutions, nothing special turned on that. But that was the event for us to say, okay, we can get back into the market buying shares. So the fact that we bought in the first part of 2022 happens to coincide with a weak market, but it was more related in our perspective from the fact that we hadn’t been buying shares back. And we’ve been selling a bunch of assets, as I showed on Page 17 or whatever the page was that I went through the divestitures. What happens — if you think about it, when we sell an asset that is — particularly an asset that’s either non-core to us, non-financial services and typically, if it’s at Power, a lot of them are NAV based. We sell an asset at NAV, and then we turn around, we buy our shares back, and we buy our shares back but buying them at a discount to NAV, so that’s a good thing. We’re arbing [ph] that. But the other thing that’s happening is we’re kind of at the margin every time we do that increasing the percentage of our company that comes from earnings. Because if you see that — of the value that Power Corp. has about 75% of it, I’m just being simple, but Great-West Life and IGM, about 75%, our value is really earnings and dividend growth based. And not to oversimplify, but the rest of 25% is for the most part NAV based. So you sell an asset at NAV at $1, you buy stock back at $0.80. And then when you’re buying the stock back at $0.80, you’re actually buying 75% of that value that you’re spending is increasing earnings relative to what you sold. So I’m just doing a little financial math with you there. As we buy the shares back, we’re actually arbing the discount but also changing very slowly, but over time more meaningfully the mix of earnings versus NAV. So we think it’s — in the absence of one of our subs doing some transaction where they ask us to finance it, that’s a good use of our capital right now.
Graham Ryding
Okay, that’s fair. And then just a last one, if I could. This late stage fintech fund seemed a little different than your previous ones, Portage, they were more venture focused. So what are you seeing in the market that makes you think there’s opportunity here for more late stage, a whole niche focus [ph] fund?
Jeffrey Orr
A whole bunch of capital having rolled into fintech in the last three, four years with a lot of companies that are not yet to the point where they’re cash flow positive, having markdowns on their values, we’ve experienced some of that ourselves, and going to be needing capital to get themselves to the stage where they’re profitable, but not necessarily a lot of venture money ready to jump in now because the momentum has been lost on the trade and on the investment. So to us, that smells an opportunity to use our network and our expertise to fund later stage companies that are — when I say late stage, they’re still venture but they’re later stage venture. That is the opportunity that the Portage team is seeking to take advantage of.
Graham Ryding
Okay, understood. Any size that you’re targeting here or too early to –?
Jeffrey Orr
We can get back to you on that. That would probably be in the public domain. Greg, do you have that at the tip of your tongue?
Gregory Tretiak
I don’t know that it’s in the public domain yet [indiscernible] target will be, Jeff. I think that that’s still on the come, Graham, that more fulsome disclosure, but we’ll certainly let you know when it’s available.
Graham Ryding
That’s fine. That’s it for me. Thank you.
Jeffrey Orr
Okay. Thank you.
Operator
Thank you. The next question comes from Nik Priebe of CIB Capital Markets. Please go ahead.
Nikolaus Priebe
Okay, thanks. Maybe as a bolt-on to one of the earlier questions, you had a page in the presentation dedicated to highlighting some of the progress that you’ve made in making the platform increasingly capital light over time. When you look across the various businesses, is there any other low hanging fruit you see to advance that a little further, whether it’s the sale of a secondary sale LP interest or sale of standalone business? I’m just trying to understand what the roadmap might look like on that front over the next year.
Jeffrey Orr
It’s a good question, and I’d love to be able to give a good answer, Nik, but not sure I can. And I’ll just give by way of example. When we launched the strategy and said, we’re going to be looking to move capital light, we’re going to move these to a fee business based on third party capital and we’re going to try and raise some capital from our standalone businesses, look at the way the world actually worked out. We got into a COVID case, and all of a sudden Lumenpulse, which we thought was going to be part of that, their business got impacted. EV took off, electric vehicles, and ultimately Lion which we really hadn’t done a lot of focus on in terms of being a major source of cash, became a very, very meaningful value creator. But in order to realize that, you got to support it to a stage where it’s got its business a little bit more developed. So bigger opportunity, but going to take longer. And so the standalone businesses, we did liquidate, sell GP strategies, which is on Page 15. But that’s a small part of it. We really didn’t have in our playbook that Sagard 3 would be an opportunity to raise capital, but there’s such an interest by some secondary funds that that became an opportunity. They were out fundraising for fund 4, but they got interest in fund 3. Wealthsimple financing, we didn’t have in our playbook. We’d be doing a secondary. So I guess I’m trying to give you an example that we have an overall approach across a pretty wide variety of assets that we have to realize cash. But looking forward, do we know where the opportunities are going to be? I can’t kind of give you a roadmap on that. I can just say that with the way we think and we’ll look for opportunities to do so. But I can’t tell you this is going to be sold or that’s going to be sold. I just don’t know at this point. I’m sorry if that’s not been helpful. On the ChinaAMC, I mentioned ChinaAMC was really not predicated on trying to raise capital, but you kind of kill two birds with one stone. And that you say it does make sense in terms of Power’s simplification strategy to not have ChinaAMC in two places. We’d love to get it in one place where it belongs, where it can get better value recognition. And then you work out the economics of all that. And lo and behold, we’re taking back only half of the proceeds in Great-West Life stock, which is in furtherance as well to simplification, but we’re taking half out of your cash, and so you got another opportunity to raise cash right there at the Power level. So we actively manage this. We’re looking for opportunities. Maybe we’ll go through a period where we don’t realize anything. Maybe we’ll go through a period where we realize a lot. I can’t tell you. The market’s being down and just environment is probably less conducive to selling assets right now than it had been over the period of 2021. That is an overall tone here of caution that we don’t have — the capital is not running around chasing transactions the way it was in 2021. So that’s a bit of a note of caution, Nik.
Nikolaus Priebe
Fair enough. And ChinaAMC is a good example of that. On the fundraising front, are you able to give us an update on just what the third party demand looks like for Power Sustainable strategies specifically, which I think historically have been a bit less advanced with respect to their reliance on healthy capital, or let’s call it third party assets. I’d just be interested in an update on how the outlook appears for scaling those strategies?
Jeffrey Orr
Yes, great question. And for sure, the strategies that existed within the Power Sustainable capital realm had really been built for Power’s own balance sheet, both the China strategy and then the energy infrastructure, which is an equity strategy. So if I start with China, great track record. They got off to the races early by raising third party capital. But putting money into China right now is not at the top of every investors list, right? There’s uncertainty around the market. So we think that that will be successful over time. But that’s not exactly the hottest area right now. And the energy, we had a portfolio of assets that were and still are, to some extent, underdevelopment, so Greenfield wind and solar projects, for example. And those were at such an early stage, and if they were not necessarily ones that you could raise, you could put into a fund. So some of those assets remain on the Power play balance sheet, and with the funds that we have raised, the energy infra fund $1 billion, as those assets come to fruition, they get transferred into the fund. So we’ll get some more cash as that goes forward. Your question was on fundraising, however, and I do think that we’re optimistic. We can do more fundraising in the energy infra fund. And there’s some other product extensions that we think we can do in the energy area that we think can raise some capital. In addition, I mentioned the Canadian sustainable agri fund that we did raise over 200 million on a first close here. And so there’s good interest in that area. So I think lots of progress and lots of opportunity to continue to build that business out. But it really started as that was the most capital intensive part of the whole thing. And it was never geared to be a third party. So the Personal Capital team comes with a bigger challenge than the Sagard holdings team that was already to a large extent in some third party funding businesses around Portage, the fintech around Sagard in Europe, and then the transaction they did with EverWest with Great-West Life that was already in third party funding. So they just got a further stage in their development. I hope if I answered the question for you.
Nikolaus Priebe
That’s good color. That’s all for me. Thanks for taking the questions.
Jeffrey Orr
Okay. Thanks, Nik.
Operator
Thank you. The next question comes from Doug Young of Desjardins. Please go ahead.
Doug Young
Hi. Good morning.
Jeffrey Orr
Good morning.
Doug Young
First on the Wealthsimple just so I got this right, because it’s consolidated, Greg, you don’t take the earnings hit from the valuation decline. And you’ll actually get an earnings pickup from the revaluation of the put option liability. Do I have that right? I apologize. It’s Monday morning and I’m still kind of low here. And if that’s right, what was the positive impact from the revaluation of the put option liability this quarter?
Jeffrey Orr
Greg, you’re going to take that?
Gregory Tretiak
Yes, for sure. So yes, because it is consolidated, we don’t get to enjoy the mark-up or mark-down on the asset, if you will. And it’s really the carry that was affected by the valuation adjustment in the period. And I think I’m remembering it right, but I think it was $36 million negative, and you see that in Sagard’s asset management activities line. And if you go to that page in the back of the deck, Page 33, you’ll see the color there. However, there is also an offset to that of $25 million where it is in the Portage fund, which is, of course, taking the other side of that transaction because that’s who the carry is paid to.
Doug Young
Okay.
Jeffrey Orr
And there’s no put option anymore. It was extinguished at the funding round last year. As part of that funding round, we negotiated with management but the fund was gone. Part of our financials did exist, but no longer does.
Doug Young
Okay, so then that answers my second question. Okay. Maybe, Jeff, on to you bigger picture. One of the levers — you’re talking about three levers to surface value and you’ve been very consistent in that. And we’ve seen some actions on this. But one of the levers you talked about is actions between the hold-co and the publicly traded operating companies and investments. ChinaAMC makes a ton of sense. You’ve talked a lot about that. What else can you do between Power and IGM, Power and Great-West Life in terms of shifting things around to surplus value? Like is there stuff — like what’s your vision there? Is there more to be done? Can you maybe kind of flush some of that out?
Jeffrey Orr
Yes, it’s a good question. And it’s not kind of a linear answer in terms of it’s only this thing that we do or that thing that we do. I think when you — I would bring your question up a level to say we have a simplification strategy, because Power Corp. has been far too complex for investors to understand. And the simplification is on a whole series of dimensions. One of the dimensions is our structure. So we’ve done a lot with respect to the Power Corp. reorganization, our financial, the purchase of GBL. Another is where we hold things. So CAMC is in two places. IGM owns a big chunk of Great-West by stock. Those are things that complicate life and investors go lately [ph], why would you want it there? Some of those things were done for valid business reasons. It’s not like they were done without thought. There were usually at the time of those transactions either constraint on where you can buy things or need for capital or what have you, but straightness. So cleaning that up over time in a way that makes sense when the opportunity is right is the second piece of the simplification strategy. And the third piece is to simplify what we do and not have us do 20 different things that look like they’re all in different industries so that people go around to get this. We’re trying to simplify our business, and the main focus here is financial services. So the move over time to transform the Power Corp. operations from diversification to financial services without blowing up the assets that we have or blowing up the management teams that came and worked for us and signed up, because we’re good long-term shareholders, so doing things in a methodical smart way that honors our commitments to people, but simplifying what we own so that its financial services, while we communicate, is all part of the strategy of getting greater value and having the market appreciate the value. We’re also hearing a little theme playing into it that getting over time greater focus on earnings and increasing earnings I think will reward all Power Corp. shareholders well at the margin getting more earnings driven, those are all the themes we’re playing into it. So now that was a — I got really big picture, but that is the way we think about it. And so whether there are other specific examples, the co-ownership structures, we know a lot. We co-own right now. We still got some great stock in the IGM balance sheet. There’s a further opportunity, but when and how that gets realized will be told in the future. I don’t know the answer to it. But it’s the bigger picture I think is where you got to go. We are on a simplification strategy.
Doug Young
Yes, where it’s going and I think just it makes a ton of sense. And you look around the portfolio between Great-West, IGM and Power, you’ve got asset management at Great-West with Putnam, you’ve got asset management obviously with IGM, and you now have some asset management up at the Power level. I guess where I’m going would make a ton of sense. And it’s a lot more complicated than me being an armchair quarterback here. But does it make a ton of sense to have asset management in one particular — is that something that goes into the simple vacation? Is that just something that just is not on the table, or is that something that you think about?
Jeffrey Orr
It’s a great question. And I should have gone there, because I should have actually had an — when you said it, my mind didn’t go there. But that’s a great question and an obvious one, and one we spend a lot of time thinking about it. So the answer is yes, but it’s also got to be doable and practical and not kill the businesses. You got to do what’s right for the business always. So the examples of us having done so, as you know, in Canadian asset management, we took all the IG investors group investment management and put it into Mackenzie. And then Canada Life was managing its Canadian shelf of public equities in debt. And that looked like it was duplicative in, I won’t say, an easy move, but one that was easier. So we then transferred that business and negotiated between the IGM and Great-West Life teams. And that was an effort of consolidating our asset management. When you then get to the other obvious questions, which is the Great-West investments like Putnam and we got Mackenzie, it gets more complicated. You’ve got different business models. And typically, when you’re doing a transfer, there’s a big synergy to kind of make it work. They’re not always obvious when you’re going into different markets, maybe long-term benefits. So it’s something that we have been asked a lot and we look at from time to time, but we don’t do any — but there are some impediments to us doing that at this point. So that’s at the Putnam level. At the asset management level at Power, you go with where the opportunity is. And the fact is we had the teams at Power and we’ve got people ask investment managers in the alternative space who were working for us, for the group, they weren’t working for one of the subs. They weren’t working for one of the public OpCos. They were working for Power, and those teams have an ability to attract additional talent to them. And that’s the key as you know in investment management, it’s all about talent, investment management talent, we’re able to attract them. And so we’ve got the businesses at Power, and they’re running and they’re growing. And you don’t just turn around, say, well, why don’t you all go work somewhere else. We’re going to move you to another company. It doesn’t work that way. You could destabilize them. So I guess I’m going to come back to a high level. We are trying to simplify. But we do have a number of public companies, and we have businesses in those public companies that are people businesses, and you prioritize not doing anything that would get — the first priority is make sure the businesses succeed and that trumps and are putting them all in one place, which on paper it looks good. But if there’s not real synergies in doing it, you don’t do it. So long answer, maybe too long for you, but that is the way we think about it.
Doug Young
I appreciate the color. Thank you.
Jeffrey Orr
Thank you very much.
Operator
Thank you. The next question comes from Tom MacKinnon of BMO Capital. Please go ahead.
Tom MacKinnon
Yes, thanks for taking my question, and good morning, Jeff and Greg. Just taking this Power simplification theme a little further, and this may have been asked in prior quarters, but Wealthsimple here owned in two places. You took some money off the table, which in hindsight is good, given the markdown. How does this — you’ve got another kind of retail wealth management strategy that kind of plays a bit into fintech space being the, or robo space as well in Personal Capital. And that seems to have been probably closer to breakeven and more successful leverages into Great-West, and we can see how that happens. Just with respect to Wealthsimple, you’ve got a lot of windows into this fintech space through other means now. How does it leverage into the company in terms of just provide intel? And what’s the longer term plan for it with respect to joint ownership and where it fits overall in the whole Power group? So lots to chew on there, sorry, but anything you can give is great? Thanks.
Jeffrey Orr
Yes. Hi, Tom. Thanks for your questions. It’s a good one. I’ll start by addressing the Personal Capital and Wealthsimple. Financial services are really a regional market here. When I say here, they are a regional market. It’s not because somebody has a franchise in one country that you then just port it to the other side of the border. The regs are different, that competitive reality is different. It is — financial services at the individual level is a regional market and Wealthsimple and Personal Capital have extremely different business models. They are both emerging in the fintech space, but they are not the same business model at all, either in their technology, their approach to market, or the clients that they focus on. So that’s not a marriage made in heaven, I guess, is what I’m saying. And even Great-West Life has purchased Personal Capital where the synergies are very, very significant over time we think. Wealthsimple, if I flip there, there’s a good example I think it was on the next question about complication. But how we end up with things in different places? It’s not that we try to complicate life. But when Wealthsimple came along, the opportunity came through and it was the team in Portage and Paul III [ph] and Adam and the whole team there that were close to it. And so the initial providers of the capital at that time was Power. We saw the opportunity. And we funded the first few rounds. And we said to Wealthsimple, you’ve got a good thing. We want to support your business. We’ll provide the capital, assuming you make your business plan goals. And the first few rounds happened out of Power, because that’s where we had the interest and IGM was less focused on at that time. As time went on, the whole — Wealthsimple, it became obvious was a way for our group to get exposure to a direct-to-consumer digital model going after the next generation in effect and creating a franchise there. So we said, well, let’s put some capital in there. We don’t know where this thing is going to go. But we’re not exposed there. And we should be, because how is financial services going to emerge over time? And how big is digital going to be? And what’s the next generation going to catch out there? So we decided to invest in that area without necessarily having a clear idea where it was going to go. We didn’t bet the farm. In total between ourselves and Great-West, we invested 315 Canadian. And so it wasn’t — like we have no crystal ball here. It was to position ourselves in the sector and see where it goes. So that’s where we’re at right now. And we have the investment in two places for those historical reasons. Where does it go in the future? We said all along I think IGM and James O’Sullivan will say the same thing. We are going to continue to support the growth of this business and we have full optionality. I don’t know what we’re going to do in the future. We have taken all of our initial 315 off the table and then a little bit more than that. We own between 43% and 48% of the company between ourselves and IGM based upon how management options get realized over time. So we’ve got all the optionality in the world. And we’ll just decide how we’re going to play it as the world unfolds. Haven’t made any, like those are future decisions. So I’ve given you — I think they’re hopefully the explanation to why Wealthsimple and Personal Capital are different, how we ended up with Wealthsimple in two places, and why we did it in the first place? And going forward, we’re just kind of going to continue to watch it develop and [indiscernible]. Tom, I’d like to go further but we aren’t any further. That is where we are in our thinking.
Tom MacKinnon
So it sounds like — you’re playing with the house money here. Do you continue to think you’re going to have to put more money into it? Or if more money’s needed to change it or grow it, does that just come from more third parties? Or would that come from Power or IGM?
Jeffrey Orr
Yes, we haven’t crossed that bridge. That’s pretty well financed right now from their previous rounds of financing. And I think we’ll make that decision in the future. And one way to look at it is it’s simply a financial bet we put money in and we took the money off the table and it’s house money, and that’s true. So we feel great about that. But I don’t know that Wealthsimple could be part of the Power grid for the next 50 years. Like it could become a core part of the franchise or maybe we don’t play it that way. When I say about optionality, it’s not just a venture capital bet. We’re in financial services. And we got in there because we want to see what was happening and have a leg in the digital emerging space, as I said. And then whether we’re deciding that we’re going to be there long term or we’re not, I think those are decisions in the future. We just don’t know.
Tom MacKinnon
Okay. Thanks for the colors.
Jeffrey Orr
Thanks, Tom.
Operator
Thank you. The next question comes from Graham Ryding of TD Securities. Please go ahead.
Graham Ryding
Yes, just wanted a follow-up question, if I could. Jeff, just you talked about some themes. I wanted to sort of revisit GBL. It’s a sizable investment for you, 7% of your gross asset value, but you talk about sort of simplification of the business and looking to own financial services, and then also a greater focus on earnings, less focus on NAV. So how should we think about GBL? It’s an obvious fit with those sort of themes. Maybe we can sort of revisit that.
Jeffrey Orr
Yes. So my comments were directionally, yes, when looking at more on earnings, but not doing anything that destroys value, short or medium or long term through taking actions that destroy what we got or hurt when we have. GBL in its own right is making a switch into more privates and asset management, if you look at what they’re building with Sienna, and therefore there’s some of that going on within business. I’ve always said on GBL, that’s a part of Power that doesn’t in its current configuration fit the definition of financial services perfectly. I acknowledge that. We’ve acknowledged that. But we also have a 40-year history of having built up a business that is the second largest holding company in Europe and has a flow of transactions, both at the GBL level, at the Sienna level, but also was the genesis of Sagard equity way back when it was launched the private equity funds because it was a deal flow in the private space that at the time, and still to this day might have been too small or out of scope for GBL. So we’ve got this machine over there and this presence in Europe that brings a lot of information, a lot of knowledge, a lot of windows and has created value over time. So you don’t just turn around and say, well, that’s no longer — that’s not pure financial services, or it’s not pure earnings. Let’s just exit that. That’s not the way we think. We think about many, many other things that we can work on to simplify, create value along the strategies I’ve articulated, and GBL is carrying on its own strategy of rotation in the private assets and more towards financial services. And we’ll just see how that goes. But there’s no — in the short term, we have no current plans to be divesting — if that’s underlying your question, that’s not the plan.
Graham Ryding
I just wanted to get sort of updated view on how it fits with the overall strategy. But that’s helpful. Thank you.
Jeffrey Orr
I’m going to go back to Tom MacKinnon’s question on Wealthsimple. Tom, I don’t know if you’re still on the line, but I didn’t say that, notwithstanding the markdown that Wealthsimple has — that’s gone on with Wealthsimple, and that’s obvious in terms of valuations of tech companies and then slow down in market activity and then in business activity in certain areas. Wealthsimple have done an unbelievable job, the management team in creating a brand. And then going out, I think we’ve got 1.7 million clients if I’m doing that right. Our disclosure will be elsewhere. But it’s created a major client base, major brands, happy clients with good experiences in an area of the market that is going to be the — it is the next generation. And so they’ve done a great job. And so valuations go up, valuations go down. But I don’t want to let this quarter go through and talk about it right now on this thing. The company’s done a great job and they’re very, very well positioned going forward in the future and well funded at this point. So I’ll add that, Tom, if you’re still listening.
Operator
Thank you.
Gregory Tretiak
I’ll just add that you’re right. It’s the 1.7 million clients, but 17 billion in AUM as well.
Jeffrey Orr
Boy, quite a day when the CEO was picking up a decimal place on the CFO. Greg, my week’s off to a great start already.
Gregory Tretiak
I’m thinking 10 years ahead.
Jeffrey Orr
All right. Operator, more questions?
Operator
Thank you. [Operator Instructions]. The next question comes from Geoff Kwan of RBC Capital Markets. Please go ahead.
Geoff Kwan
Hi. Just have one follow-up question. We’ve seen other alternatives private equity managers that have looked to distribute their funds through proprietary wealth management arms. Is that something that Power is looking to do? So for example, whether [indiscernible] whatnot or is it maybe perhaps given — you’ve got a number of different strategies, a number of them are relatively new that maybe you’d wait for future iterations of those funds before looking to distribute those through your retail wealth management channel?
Jeffrey Orr
In terms of examples, and Greg I might kick it to you in a second. But in terms of examples of others, I haven’t kind of — I’m trying to think of where there are, where you got — we’ll come back to you on that. But what I am going to say is that definitely the teams at Sagard, Power Sustainable Capital and Northleaf within IGM are in discussions with our retail platforms to look to see how they can be distributing products, they can be embedding product, particularly in multi-asset strategies, if you think about the mass affluent market may not be appropriate that an investor who’s got whatever portfolio that they’d be making direct investment. But if they’re got an asset allocation program and there’s some portion of that program that’s got a portion of its assets invested in alt, that can make sense. And the teams are working hard on that with Northleaf and with our group at Power Corp. to get access to product because they want that kind of product across IGM. And I think you’ll see it through Great-West Life over time. So that’s pretty much a focus. And I know other groups who have been in the liquid asset management business who are buying into, and capabilities in non-liquid are looking to feather those strategies through their distribution, and I’m sure some of its prop, but I can’t kind of articulate all the names there. Greg, do you want to add anything to what I said in answer to Geoff’s question?
Gregory Tretiak
No, I don’t think so. But certainly Northleaf, like that’s where my mind went to is already been exploring those type of opportunities. And I think you’re quite right that not only our own distribution channels that others were, like our major manufacturers, like Mackenzie and their relationship with distributors are looking to provide this type of product as well through their efforts.
Geoff Kwan
Okay, great. Thank you.
Gregory Tretiak
Thank you.
Operator
Thank you. Ladies and gentlemen, there are no further questions at this time. This concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
Jeffrey Orr
Thank you.
Gregory Tretiak
Thanks, everybody. Bye now.
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