February 23, 2011 / 6:07 PM / 7 years ago

UPDATE 3-CI Financial reports higher adj profit, eyes M&A

* Q4 EPS C$0.32 vs analysts’ forecast C$0.31

* Raises monthly dividend to C$0.075/shr from C$0.07

* Company could make international acquisitions

* Says Scotiabank has lost interest in CI stake (Adds details, CEO comments)

John McCrank and Cameron French

TORONTO, Feb 23 (Reuters) - CI Financial (CIX.TO) reported higher core earnings on Wednesday, prompting it to raise its dividend, while its CEO said the mutual fund manager would be interested in making international acquisitions.

Toronto-based CI, which tried and failed to acquire rival DundeeWealth (DW.TO) last fall, could look abroad due to limited opportunities within Canada, Chief Executive Stephen MacPhail said on a conference call.

“We’re going to continue to pursue consolidation opportunities,” he said.

CI’s all-stock bid for Dundee was not publicly disclosed until after Bank of Nova Scotia (BNS.TO) swept in and exercised a right of first refusal to buy the 82 percent of Dundee it did not already own in November.

MacPhail said he was disappointed CI was unsuccessful in its bid, but noted the company ended up making a small profit due to a break fee involved.

In addition to now owning Dundee, Scotiabank also owns about 36 percent of CI, and some have wondered if the bank might now be willing to unload the stake.

MacPhail did nothing to dissuade that notion, saying that Scotiabank’s interest in the CI stake has waned in the wake of the Dundee takeover.

“They’ve really lost interest in our business, that’s been clear,” he said.

“I don’t know what it means they’re going to do, but from CI’s perspective, we’ve had to conclude that ... we’re going to plot our own course going forward.”

    But he said any sale of the entire CI holding would require approval from CI shareholders, due to a poison pill that restricts sales of more than 10 percent of the stake, he said.

    While the Dundee deal fell through, CI bought the Canadian mutual fund business of U.S. insurer Hartford Financial (HIG.N) for an undisclosed sum late last year. That deal added about C$1.75 billion in assets under management, or about 2 percent of CI’s total AUM.

    PROFIT TOPS ESTIMATES, UPS DIVIDEND.

    On a net basis, CI earned a C$91.4 million ($92.3 million), or 32 Canadian cents a share, in the fourth quarter, down from C$118 million, or 40 Canadian cents a share, a year earlier.

    Stripping out one-time items, it earned 32 Canadian cents a share, up from 27 Canadian cents a year earlier and just topping the 31 Canadian cents expected by analysts.

    CI said assets under management have risen 8 percent in the early weeks of 2011 from the fourth-quarter average, due to strong markets.

    The monthly dividend rose to 7.5 Canadian cents from 7 Canadian cents. On an annual basis, the dividend is 90 Canadian cents a share.

    Shares of CI, which hit a 52-week high of C$22.75 on Tuesday, eased 14 Canadian cents to C$22.22 on the Toronto Stock Exchange.

    $1=$0.99 Canadian Reporting by Cameron French; editing by Rob Wilson

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