UPDATE 3-CI Financial profit gains; eyes acquisitions

Tue Aug 9, 2011 5:44pm EDT

* Earnings per share of C$0.34 vs expectations of C$0.35

* Asset levels up 17 pct from yr ago

* Market weakness led to fall in AUM of 1.8 pct in July

* Shares close up 1 percent at C$20.40 on TSX (Adds CEO comments, updates shares)

By John McCrank

TORONTO, Aug 9 (Reuters) - CI Financial Corp (CIX.TO) said on Tuesday that higher asset levels led to a 9.8 percent gain in its quarterly earnings, just a tad off expectations, but that recent market weakness was pressuring assets under management.

Canada's No. 3 investment fund company, which is 36-percent owned by Bank of Nova Scotia (BNS.TO), said it earned C$98.3 million ($100 million), or 34 Canadian cents a share, in the second quarter, up from C$89.5 million, or 31 Canadian cents a share, a year earlier.

The earnings per share were a penny shy of the average expectation of analysts, according to Thomson Reuters I/B/E/S, and the company's shares ended the session up 1 percent at C$20.40, on a day that saw the broader Canadian market gain nearly 4 percent.

Speaking on a conference call, CI Chief Executive Stephen MacPhail said the fund manager was eyeing acquisitions in the United States and would be prepared to pay to take advantage of depressed valuations in the wake of the recent equities selloff.

"If it was a brilliant opportunity north of $1 billion, we wouldn't say no to that," MacPhail said.

He said the company would also be examining opportunities for share buybacks.

Total revenues were up 14.7 percent at C$385.5 million, slightly below the C$387 million expected by analysts.

Gross sales of funds were C$2.52 billion, flat from a year earlier, while net sales of funds came in at C$309 million, versus $310 million a year ago.

CI said its total assets, which include mutual, segregated, and hedge funds, separately managed accounts, structured products, pooled assets, and assets under administration, were up 17 percent from a year earlier at C$97.16 billion.

Assets under management (AUM) rose 19 percent to C$74.28 billion at the end of the quarter, due to gains made by financial markets over the last year and a rise in sales of CI's investment products.

The recent market weakness has taken a toll on CI's AUM, with assets down 1.8 percent at C$72.9 billion at the end of July from the end of June, the company said.

CI stock ended the session up 20 Canadian cents at C$20.40 on the Toronto Stock Exchange.

($1=$0.98 Canadian) (Additional reporting by Cameron French; editing by Rob Wilson)

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