Power Corporation of Canada

Good morning, ladies and gentlemen, and welcome to the Power Corporation's first quarter 2025 earnings conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. Analysts who wish to join the question queue may press star then 1 at any point throughout the call. If anyone has any difficulties hearing the conference, press star then 0 for operator assistance at any time. I would like to remind everyone that this call is being recorded on Wednesday, May 14th, 2025. I would now like to turn the conference over to Mr. Stephen Hung, Head of Investor Relations for Power Corporation. Please go ahead, sir.

Thank you, operator. Good morning, everyone. And thank you for joining the call to discuss our first quarter financial results. Before we begin, please note that the live webcast link and materials for this call are posted under the Shareholder Reports tab on our website at powercorporation.com. Please turn to slide two. I would like to draw your attention to the cautionary note regarding the use of forward-looking statements, which form part of today's remarks. Please also refer to slide three for a note on the use of non-IFRS financial measures, other measures, and clarifications on adjusted net asset value. To discuss our results today, Joining us are President and CEO, Jeffrey Orr, and our EVP and CFO, Jake Lawrence. We will begin with opening remarks, followed by Q&A. With that, I'll turn the call over to Jeff.

Thank you, Steve, and welcome, everyone. Thanks for joining us this morning. I am going to just draw your attention on page five to recent events. investor disclosures at our various group companies. Of course, we've just come through a number of annual general meetings for Great West and IGM and GBL, and Powers is later this morning. As well, there was a Great West Life Co-Investor Day that had a lot of interesting information, so lots of stuff available on our various websites. Moving forward, this is PowerCorp's 100th anniversary this year, so we're celebrating what we call a century stronger. The actual birthday was April 18th, and we're just cleaning up the birthday cake around here. Now, it's a big year for us. The company's been around a long time, gone through a lot of change, and so we're celebrating that this year. Moving forward to page seven, you know, we had, I would describe, a solid quarter on track. The two businesses, Great West Life and IGM, that produced basically all of our repeatable earnings, had solid earnings growth. I mentioned the Great West Life Investor Day. I'm going to come back and highlight a few points on that. Our alternative asset management platforms did a number of steps since we last met, which was only about seven or eight weeks ago, I think, when we had our Q4 call. So a number of other developments adding to the scale and the breadth of those organizations. And there's a number of leadership changes that I want to give my comments to and to you and share with you as we go through the presentation. With that, I'm going to pass it over to Jake.

Great. Thanks, Jeff. And I'm going to start my remarks today on slide eight. Jeff noted we're pleased to report solid quarterly results to start 2025. In Q1, adjusted net earnings from continuing operations was $787 million, and that's up 11% compared to $710 million in the same quarter of 2024. When we look at the earnings on a per share basis, Q1 adjusted net earnings were $1.22, and that's up 12% compared to $1.09 last year. That incremental 1% growth in EPS is a direct result of our active share buyback program. That program continued again throughout Q1 when we repurchased 3 million shares. As I'm going to detail later in the presentation, our results reflect growth in Great West and IGM financial businesses, which Jeff noted combined the vast majority of Power's recurring earnings. Our NAV per share was $68.99 at the end of the quarter, March 31st, and that's up 14% compared to the end of last year, December 31st, 2024. What was driving the underlying increase was Great West share price, which reacted positively to its Q4 earnings release that occurred back in February. As noted, we've remained active buying back shares in the quarter, and the reduction in share count contributed approximately 23 cents to the NAV. Our NAV per share closed at 63.60 yesterday, and that's in part reflecting the share price volatility we've experienced post-quarter end. And then finally, the Board of Directors did declare a quarterly dividend of 61.25 cents per share, and this is consistent with last quarter's dividend and is up 9% year over year. Moving on to slide nine, Great West once again delivered strong quarterly base earnings of over $1 billion, and it's the fourth consecutive quarter with base earnings in excess of $1 billion. Their earnings contribution rose 6% and were driven by double-digit growth in its retirement and wealth businesses. Great West also reported base ROE of over 17%, highlighting the growth in its more capital-efficient businesses. IGM's contribution to powers earnings were also up 6% year over year, as IGM reported record first quarter adjusted EPS to start 2025. These results were driven by record quartered AUM&A and strong net inflows at both IG Wealth and McKenzie. As well, IGM saw impressive growth in client assets across its four strategic investments. GBL's contribution to powers-adjusted net earnings declined year over year, as the prior year comparable figure included a number of fair value gains associated with GBL Capital's investments. As Jeff will outline shortly, GBL continues to progress on its value creation strategy, and earlier this month, its dividend of €5 per share was approved. Moving to our alternative investment platforms, Cigar's contribution to earnings were driven primarily by fair value increases, in our investment in CIGARDS private equity and venture capital funds. Power Sustainable's results included improvement in its FRE and greater contribution from its energy infrastructure fund. As a reminder, in accordance with IFRS, we consolidate the underlying operations of Power Sustainable's energy infrastructure fund. This means that despite being a limited partner in the fund, our accounting earnings will still pick up items such as amortization as well as financing expenses. The increase in our corporate operations and other line this quarter was driven primarily by operating expenses where we had an adjustment related to the performance assumptions used in our equity-based compensation. A portion of the adjustment is one time in nature, and this adjustment is expected to reduce volatility in future quarters. Overall, we're pleased with our group's strong start to 2025 and believe this quarter's results are a testament to our group's ability to grow in challenging environments. Moving on to slide 10, as mentioned, we reported net asset value per share of $68.99 at the end of the quarter. I'll draw your attention to the bottom left of the page where we re-emphasized that 84% of Power's growth asset value is comprised of Great West and IGM, our publicly traded earnings-driven businesses. Much of our NAV growth this quarter was headlined by the strong share price performance at Great West that I mentioned earlier. We believe the share price reaction represents the street validation of the transformation Great West has undergone in recent years. We also saw a solid increase in our NAV related to GBL. Saigard and Power Sustainable stayed relatively consistent quarter over quarter, with fair value gains in our investment in private equity and venture capital funds driving a slight overall increase. As a reminder, Saigard and GBL entered into a strategic partnership whereby GBL acquired a 5% fully diluted interest in the Cigar General Partnership at a value consistent with our Q4-24 level. Our cash balance ended slightly lower at $1.4 billion as we remained active in the NCIB program. Of that $1.4 billion, we consider just over $1 billion to be available once we factor in dividends declared by Power and IGM, but not yet paid. And with that, I'll turn it back over to Jeff for some more remarks from him.

Thank you, Jake. Moving forward to Great West Life, a lot of that was covered by Jake. I'll just add that within Great West Life goes earnings, strong performance, continued strong performance by Empower, but actually strong growth across the rest of the platform, and that's the way we think of it. We're going to get growth in our view moving forward from all of the business units. Empower is obviously the lead growth, but there's solid growth coming from across the platform. The other thing I would just point out is the capital position and the capital generation of Great West Life Co. is becoming, I think, clearer and clearer, and I'll make a comment on that on the next page. But there were strong buybacks and the $2.5 billion of cash up at the Holds Co. in addition to excess capital down in the regulated entities themselves. So with that, why don't I just move to page 12 to highlight, I think you would have potentially seen this from Great West, But Great West Life had come public with their medium-term objectives, and that was in early 2021, start of 2021. And they, at their investor day in April, kind of just did an accounting of that. They had exceeded, of course, their base EPS growth. Their 16% to 17% ROE, they were at 17% last year. and they had got their payout ratio from about 60% in 2020 down to right around 50%. So with that, they revised their objectives. They kept the base EPS growth at 8 to 10, but did note that there's a potential for them to exceed that through the deployment of excess capital because there's a lot of excess capital. They moved their ROE target up to 19%. They introduced a new base capital generation measure And that goes across the segments. I think that's going to be really useful for people who are looking at Great West Life Co. to understand how the earnings actually translate into capital generation that can then be used to either move upstairs, pay dividends, reinvest in the business. But that's going to, I hope and expect, will give people a lot clearer understanding of the ability of the company to continue to generate capital and cash. And they just maintain their target earnings payout ratio. So hopefully that continues the group's march to creating greater communication, greater disclosure, greater transparency around what's happening. The other thing I'd like to talk about is on the next page, you know, very significant for the companies when you have a leadership change. I want to start by saying Paul Mann was the CEO for 12 years. It's kind of remarkable, you know, the business changes every year when you go back, and we did so over the occasion of Paul's I was announcing that Paul was retiring as CEO. You go back 12 years and you look at Great West, and it's hard to recognize it today, all of the change that's gone on, significant repositioning. We went through that period in the first half of Paul's tenure where there's just heavy investments going on, not a lot of earnings growth, and the earnings growth numbers that I just referred to over the last five years We're really starting to hit our stride. The company has been really repositioned. Paul did a really great job. He's going to stay on as a special advisor into early 2026 to help and just make sure he's there to make sure it's a smooth transition with David. Not that David necessarily is going to need a lot of help. David Harney has been with the group. I say that loosely. For over 30 years, he joined Irish Life. And when we acquired Irish Life, He was running the group business. He was, several years later, promoted to being the CEO of Irish Life. Four years or so ago, took over as the president of all of Great West Life's European operations, and then added responsibility for reinsurance. And so he's had a wide remit, as they say in Europe, over the businesses of Great West Life Co. He's Started off as a math major and an actuary, but he spent most of his career building businesses, doing client-facing work. Really a talented guy, and I think he's going to really do extremely well. We're really pleased with David's appointment. Okay, a couple of comments on IGM. So it was, in fact, the record earnings for them for the first quarter, so those are good results. Choppy environment, obviously, but they did have very strong inflows. IG Wealth. in net inflows, a lot of that driven through high net worth flows. McKinsey was also in inflows. That was driven by institutional flows, but very strong institutional flows, in particular into one of their strategies, which is getting good traction globally. It was not Canadian flows. It's through international investors. So lots of good momentum happening there. And they themselves are, of course, returning capital to shareholders in addition to dividends engaged in share buybacks. So, you know, it's kind of solid performance for IGM and McKinsey. If you turn the page, however, to page 15, you've got their strategic investments, which are not a little bit analogous when Jake was talking about our NAV and talked about the part of the PowerCorp portfolio, which is not really earnings-driven, it's NAV-driven. Well, the strategic investments here for IGM are analogous to that. With the exception of China Asset Management, it is producing strong margins. But the growth across this portfolio in the client assets for the last 12 months is really quite outstanding. You've got Wealthsimple's assets at the end of the quarter up to $73 billion from $39 the previous year. Rockefeller, these are their assets converted to Canadian dollars. Strong growth year over year. China AMC's growth, the $529 billion Canadian of assets, and IGM owns 28% of that, so that's a big, their share of those assets are very large, and Northleaf in a difficult funding environment continues to grow through fundraising. So really strong performance by IGM strategic investments, and that sets the stage as we move down in time for ultimately our earnings growth driven by those businesses as they reach scale and decide to focus on profitability. A couple of comments on GVL, turning the page. So they did announce, to reiterate back in the fall, they had their own investor day where they announced that they were targeting double-digit TSR objectives through the continued execution of their strategy. They, in the first quarter, disposed of a lot of their SGS targets stake, and that's about €2.4 billion going back to the start of 2024 of assets that they have disposed of, public assets that they've disposed of. And if you then, and Jake mentioned the dividend which was approved, and then on the right-hand side you just see the transformation of their portfolio over the past five years. They've been talking about it, but you see it on a multi-year basis as they make progress. I'm going to switch the page here and then make my next comment on leadership. So Yann Galien, who has been the CEO of the company for the last 14 years, has moved into the position of chair of the board. Paul Demmer has been the chair since 2019, will move into the position of vice chair. And Johan Huth joined. He had been, the previous 25 years, had been with KKR. He was chair of their European, Middle East, and African operations company. and he's been brought on started in the last several weeks, and I think he's got a lot of energy and is very focused on the strategy execution on continuing the rotation here, and I think that will continue to strengthen the leadership over all of our group as we attract a great person who I think that will be a very good thing for GVL and for shareholders. Okay, a couple of comments on our... Alternative asset management platforms. This next page is just a visual to remind everyone how we think about it. The asset management activities of Cigar and Power Sustainable. We get value through recurring fee-related earnings and also carried interest and ultimately through the growth and the value of the GPs or of the manager. And then we have capital that is in their various investing activities or proprietary capital, which we report separately and you could think of us as an LP, a limited partner investor in there, and we get returns on the different asset classes. Those are the two main streams, and we think of it broken up in those two ways. Turning the page, Cigar just continues to make progress in not only fundraising, but in also looking at strategic partnerships. I think we spoke at the last meeting about GBL coming in as a 5% general partner and committing capital. Since we last met, They have announced the acquisition of BEX Capital, which is a specialized secondaries firm that they have acquired along with PEM last year. And so they're building out their secondaries capabilities in front of funds. And so that not only adds to their scale, but complements the lineup of products that they bring to market. Comment on Power Sustainable. They, in the last few weeks, announced the launch of their fourth product, in fact, a successful closing of their fourth product, I should say, which is a DCARB private equity strategy. This is a U.S.-based team with lots of experience that have joined our group. It's a mid-market fund that's focused on more resource-efficient and resilient North American – the North American market on resource-efficient and resilient companies. Basically, it's a DCARB fund, but it's mid-market private equity is the right way to think about it. So Power Sustainable has now got four products all in the space. You see them down the right-hand side. They're up and running and are focused on continuing to fundraise and get scale through that. So good progress at Power Sustainable. Right, then I'll complete with a few comments on PowerCorp itself. We continue to return capital to shareholders, $135 million of buybacks in the first quarter. We've got about a billion dollars in available cash. You know, we get the question all the time about, you know, if you're getting close to your 850, does that mean buybacks don't happen? We have lots of continued sources of available cash and a number of energy assets that remain as wholly owned assets at PowerCorp that were part of our, they were in effect undeveloped when we launched the new strategy. They've been developed. They're being sold into the energy fund. That's the immediate source of cash over the next couple of quarters. We've also got about $2 billion in seed capital, or seed capital, excuse me, in basically our proprietary capital invested with the platforms. We've got a targeted return of about 10% on that, which we monetize over time. We've got lots of sources of cash, so we do not see ourselves... We see ourselves being able to maintain the current pace of buybacks and don't see any issue with that. And we've done all that, and we continue to maintain a very strong financial position, which is particularly important as we have a little bit of uncertainty and market risk out there with the current environment, obviously. Our discount, we're pleased that it's... tightened in over the last few quarters. I think I've said to people before, I get myself to understanding from our operating costs that if you do the present value of those, you could get to a 2% to 3% discount. But then I can make the argument that there shouldn't be a discount beyond that, not that I expect it to necessarily go to 3%. But we think there's still been an opportunity for that to narrow, and we still do. So we're pleased that we're starting to see that narrow down. So it was at 21%. I think that's Yesterday's closed, if I'm not mistaken, if we set up date. Okay, perfect. And then flipping over to 23, you've got the returns that we created over various periods. The five-year return there is a bit exaggerated because you go back into the downturn in 2020 of COVID. So we've got the number going back to the end of 2019, which is five years and four months, I guess. So strong returns well ahead of our benchmarks. And I just reiterate, this is not a valuation story. You can do your own work on the two earnings-driven businesses that we have, Great West and IGM, on their forward PEs, but they're trading right around where they were at the start of the new strategy in 2019. And then you've had the NAV growth that's gone on. But basically the discount, which was around 24, 25 when we announced the deal, so it's at 21. So you can do the math on 4% of an NAV discount in terms of over five plus years. That's really not contributed much to the returns that we've created. This is not a valuation story. So people often go, wow, your stocks have really done well. You're on a run. And I think just look through all of that and say, yeah, well, it's because, it's because. The earnings at Great West Life and IGM have grown. The dividends have continued to be extremely healthy. And there's been net asset value growth, much of which at PowerCorp has been turned into cash and put to use through buybacks. And we don't see any reason why that strategy can't continue, given the announced targets that we have for all of our companies, as long as we execute. Of course, we have to continue to execute, which is not a given, but we have confidence that we can do that. I'm going to skip page 24. Our strategy remains the same and is kind of finished on the last page, which is looking ahead. This is the math behind how we think about our targeted TSRs. Eighty-four percent of our gross asset value, as Jake pointed out, is earnings-based. It's Great West Life and IGM. Each of those companies have got an objective publicly in the market, medium-term EPS growth objective, 8 to 10 for Great West, 9% for IGM. They each have yields that are right around 5%. In the case of Great West, they've been increasing their dividend for the last 10, 11 years consistently. So you look at that and say, if they execute... and there is no change in their multiple, which I would argue is not a high multiple right now, but if they execute on the earnings growth and on their dividends, and there's no change in their valuation, the math gets you to a TSR of around 14%. The rest of our portfolio, the bulk of the rest of Power's assets, whether it's GBL or our capital underpinning the alternative strategies, have got publicly announced targets of 10% or 10% plus. We'll continue to harvest that as we move forward and do buybacks to shrink our share base. And when we look at all of that, if we execute on that, the world behaves as it's supposed to behave, i.e. markets continue to grow in the normal course, you're going to get a return that's going to be comparable to the numbers we've produced over the last five years. Of course, there's lots of things that can happen. It's not going to be a straight line, but that is the math behind our strategy going forward, and we are very confident in our ability to execute as long as the world behaves. So I will then finish my comments by saying, is the world going to behave? Well, everybody's guess is as good as mine. There's a lot of risk and uncertainty out there, and I will note that a number of observers have commented that we are A company that does well when there's been previous downturns, financial crises, we're a solid diversified company with our businesses diversified, our earnings diversified, and a fairly prudent approach to our risk management, which is not to say there's no risk in our businesses, but we, on a relative basis, fairly prudent. But I do want to say, like, we do way better when the economy is doing well and when markets are growing and there's confidence. And so... It's nice that people think of us as a defensive play, but when things are going well and the world looks better and there's growth, that increases materially our probability of being able to execute our value creation strategy and create the kind of returns I'm talking about. So we're looking forward to the economy being strong and to some of the current issues that are going on in the world being resolved appropriately. and that would be better for us, but if it doesn't work out that way, we think we're in a pretty strong position financially in every other way. So with that, I am going to conclude my remarks, and we'll open it up for questions, operator.

Thank you. We will now begin the question and answer session. To join the question queue, you may press star, then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your request, please press star and then two. We will pause for a moment as callers join the queue. The first question comes from Doug Young with Desjardins Capital Market. Please go ahead.

Doug Young Hi. Good morning. First question, I guess, Jeff, and I think I've asked you this before, but I'll throw it out there. Is there more, and I get the evaluation that you talk about IGM, Great West, and the platforms, but is there more that you can do across the platforms between Great West, IGM, and Power to surface value? And one example, I mean, there's a Wall Street Journal article talking about, and we knew this was coming, but Empower is going to get into the the alt business. Obviously, Empower is a big part of the Great West Life platform and story. You've got a very strong and growing alt business up at the power level. I just wanted to throw it out there. How should we think about just the value creation across the platforms and the opportunity for SAG-ERG within what Empower can do on the alt side?

Hi, Doug. Thanks for the question. And the answer is that we are extremely active in encouraging our different distribution platforms to engage with the manufacturing platforms to see if there's opportunities. And in the case of Empower's announcement this morning that's in the Wall Street Journal, Cigar is part of that program, just to make the point. And the proof is in the pudding. But we, so we encourage dialogue. We create opportunities for people getting together and make sure that the distribution platforms are aware of what we are doing on the manufacturing side. We stop short and we need to stop short of ever telling our distribution platforms what they are going to put on their shelves because they have a competitive business to run. They're all running their businesses. They have, in many cases, producer obligations to clients, and even if it's not a producer standard, they need to be putting a competitor product on. So the Sagar, for example, and Power Sustainable, while we think they have great products, they're still relatively small firms in the world of alts, and their product suite doesn't satisfy the complete needs of all of our distribution platforms. So it's not realistic to think that they're going to take The majority of the share of our distribution platforms, they're going to find if they have competitive products that are better than or equal with others that are out there, they're going to get an opportunity. But you can't expect it to fill the entire shelf because they do not have the swath of products that, say, some of the very large players would have. So I'm just trying to give you context there. So the answer is it is happening. And, you know, we are in continual dialogue between our alternative platforms and our distribution platforms. Do you want to add to that, Jake?

Yeah, I would just, Doug, good question. I'd add there's the financial examples around product and distribution. And then there's the ones that are sometimes less obvious to the investment community. And so we look at the fintech strategies that exist. And so we've got partners and operating companies and port company, portfolio companies down at Sagard. partnering across the group, and so Conquest Financial Planning, existing at IGM, Nesto, the mortgage backbone at IGM. So there's lots of ways that other parts of the group are contributing in as well that are worth noting. It may not be as obvious and tangible immediately in the financial statements or in asset flows.

Yeah, if you go beyond all, I could take a lot more time to talk about how much of Great West Side's liquid shelf is managed by IGM partnerships on distributing insurance through IGM out of Canada Life. We can go on and on about what's happening across the platforms. That's it. It contributes. It helps. The old platforms have to go out and be competitive with third-party, non-related investors first and foremost. They can't just be relying on our distribution.

No, it makes sense. And it gives me a bit of flavor. And then on the BEX acquisition, can you talk about how much you purchased? I mean, details on the agreement to buy up the rest and like employee retention. And it reads like this is only for private equity LPs. Is that the case? Or is it rather a whole type of fees?

I'm going to come back. I didn't get the last part of your question. So I got the part about the financial terms which were not disclosing. Why don't I answer them and then you come back, what I missed or what you think I missed. The people retention is always the key on this. These are people businesses and CIGAR spends an enormous amount of time as they're bringing in existing strategies and partners who have built those strategies. They've spent an enormous amount of time making sure that there's a lot of exchange and that there's a cultural fit. First of all, the financial arrangements are set up so people can't walk out. But more importantly than that, they've got a very active program of bringing in their partners and using their network and introducing them to their global network as well as their LPs. They do a great job of it. That is one of their core advantages because if you don't do that, obviously you don't mind the folks to the organization. So there's a very active, and I think so far, a very successful strategy. I missed the last part of your question. You were breaking up a little bit.

Yeah, sorry. Is that only private equity LPs, or is it a slew of alt LPs that they do business in?

Yeah, so there's a lot of family. In BEX, I believe, there's a

Doug, are you asking about the asset class? It's all private equity. So there's no private credit or real estate. Yeah, that's what I was. Yeah, it's all private.

And it's secondary. Secondary.

Yeah, no, I get that. I just, yeah, I'll come back. And then quickly, you know, the size of the energy investments that are going to be folded into funds, that is a source of liquidity you talked about. Could you size that?

Yeah, so it's going to depend on timing for different projects, Doug, but it's greater than 100 million we expect in totality.

Appreciate the color. Thank you. Thanks, Doug.

And the next question comes from Tom McKinnon with BMO Capital. Please go ahead.

Yeah, thanks very much. Maybe a question just with respect to how you balance share repurchases with investing into Cigar and Power Sustainable. I mean, if I look at Cigar and Power Sustainable, they're not up to scale. You've certainly talked about how small they are. Their product set may not be as diversified as other alternatives, and you need to scale to improve the related earnings of these companies. So it seems like the strategy here is to take all the dividends you get from these earnings stories and buy back stock with this, as opposed to investing into cigar and power sustainable. How do you balance that? Those things are probably better growers. You talk about them being 10% plus growers to begin with, and how do you think that should Don't you think that would help improve the discount to the NAV if you could show that you can add value at the hold code through growth and fee-related earnings at Cigar and Power Sustainable as opposed to adding value at the hold code just by taking the dividends and buying back stock?

Yeah, so the dividends, the way we think of it is the following, Tom. The dividends that we receive from Great West Life and IGM and purchase at JBL. Those we view as the source, they're steady, they're reliable. And we use, we view that as the source of the dividends that we pay on the power corp stock. And so we put that in that bucket and we deduct our operating expenses and our preferred dividends and the interest on our small amount of debt. And we say, this is what the cashflow comes from that. And that's available for dividends on the shares, and we have about a $75-$85 million surplus right now if you run that out. So we've got some positive cash coming in from that. Then the other sources being we still have residual assets that we talked about, energy that we're disposing of. We have $2 billion of capital underpinning the alternative asset management strategies. that we think produces about 10% return, but it's not every quarter. These things are a mix of royalties, there's some debt funds, there's some private equity, there's some venture capital. It's a bit episodic. And we occasionally then sell some secondary positions in them when the market is right for that. There's a lot of secondary buyers out there. So we use the seed capital And the way we think of it, we've got our excess cash flow, some of the assets we haven't sold. We have the earnings on the seed capital, some dispositions to fund our buybacks. And that's the source of the buybacks. And we're trying to manage that $2 billion of capital to be roughly equal so that the growth in, and we're recycling it, but the growth in the capital that's producing the FRE, as you mentioned, and producing the carry as well. Don't forget, as a GP, you get carry. That source of income is going to grow, but we're trying to get it to grow on a capital efficient basis, i.e. other people's capital. Some of that is Canada Life. They work closely, for example, with Power Sustainable on their U.S. infrastructure debt fund because they have their balance sheet. Once that, they worked with them. They helped actually hire the team. So, you know, that's good. That's not Power Corp's capital. That's meeting the needs of, apropos of Doug's question earlier, that's kind of synergies between between our operating businesses and our alt platforms. So we recycle the $2 billion, we take the earnings off it, occasionally dispose of positions and fund our buybacks. And the buybacks, we think, adds a few points to our TSR because we're taking the earnings that we're getting from Great Western IGM, we're taking the dividends, and as we shrink the share base, we're adding some torque to it. As well, we're buying The share is back at a 21% discount. Hopefully that becomes an 18% discount going lower, but right now we're buying the shares back at a discount. That bumps our NAV. So we think that's kind of some icing on the cake that we're doing those buybacks, but the way we think of it, it's not funded by dividends. It's funded by the rest of the portfolio. Everyone kind of puts a line in the sand. We say we want $850 million in of cash around because we like to sit around with a lot of cash and with lines of credit. But if we got into a position, the timing on these things are sometimes funny. We could go through three quarters where all of a sudden the platforms are launching new funds and we don't have a realization for another 12 months on some assets and we could end up with a position where it looks like we're going to dip below $850. That's not going to stop us, in my view, from doing buybacks. We'll figure out how to how to manage that situation. I'll just give you one kind of number. When you look at power on a deconsolidated basis, we have about $50 billion in gross assets and we have $900 million of debt. Like if we ended up in a quarter having to either dip into our cash or end up doing some short-term borrowing or whatever, I don't expect we'll get there. I think we want to just carry on right now. Our current strategy is to keep on a steady pace on the buybacks. I threw a lot at you there, Tom.

Maybe the way I worded the question was the source of the money. Maybe you can try to tackle this approach. The $2 billion you have underpinning here in Sagar and Sustainable, why don't you increase that as opposed to buyback stock? Wouldn't that help improve the scalability of those?

You know, they've got at the margin, but our strategy all along has been we're going to use other people's capital to do it and told those teams to do that. And by adding a billion dollars over, let's say we cut the buybacks and over two and a half years, we add a billion dollars to the total capital underpinning those strategies. That's not going to move the dial relative to what they can do with third parties. And I think we, personally, we think we get better value because we're not sure at this point that all the market participants properly value the NAV part of our portfolio. And so we think they do value earnings that flow through and increases in dividends. So these are all trade-offs in life. It's not like, is it black and white, you go down this route or you go down that route. We're trying to balance all of those different interests And right now that balance is, we think we can grow the platforms with the capital we have. And we think we can, at the same time, add to our TSR by shrinking the share base.

Okay. And is there anything to read? The previous NCIB was $25 million. The new one's $20 million that you started in the beginning of March. Is there anything to read into that, why it's a little bit lower?

No, we're targeting to keep the buybacks at about the same level they've been at for the past many quarters. Okay, thanks. Thank you, Sean.

And the next question comes from Jamie Glorin with National Bank Financial. Please go ahead.

Yeah, thanks. Just wanted to follow up on that last conversation. You know, I had a billion of cash available in the $850 billion. sort of minimum holding level, but you said you would sort of go through it. How should we think about buybacks in that scenario? Would you, you know, you've used, let's say, $37 million, I think, already this year. post-quarter, but would you blow through it using buybacks or is this really just like, look, if there's opportunities come along, we'll maintain the buyback as we're going, but as the opportunities come, we'll push below that 850 level. Is that kind of the right interpretation?

Yeah, I think we're committed to doing the buybacks and we're trying to do the buybacks on a more steady basis and the cash flow that we get in from either realizing on investments or the calls that happen from the platforms to put capital to work are more sporadic than that. And we think we can manage and not get blocked by the cash position. That's what I was trying to say in my answer to Tom. And we've got lots of resources to do that. I mean, I don't think we'll get there. I think we're going to liquidate some assets here and it's not going to be an issue. We've got some pretty concrete plans to dispose of some assets and keep the cash coming in over the upcoming quarter. So I don't think it's going to be an issue. And if it were to be an issue, you're getting hypothetical. Would we break down below $850 or would we go and draw on some lines or doing something? We've got lots of tools in the toolkit. It's not something I'm particularly worried about at this point, James.

Yeah, no, understood. And then... In terms of the sources of capital, where would the public off-coast rank in those potential sources?

You mean disposing of shares? We like them both. That wouldn't be something that we would be keen to do. We added to our position in Great West when we moved the CMAC position down. Yeah, I don't see that as, I mean, you never say never, but I don't see that as a source of capital at this point.

James, when we look for, there's other pockets, right? Jeff and I both mentioned the five-euro dividend coming in from GBL. That's an incremental source of funds, cash coming into us over the course of the rest of the year. We've got some of the infrastructure energy assets we expect will be recognizing a sale on in the coming quarters. There's lots of pockets that easily push down any appetite to need to want to liquidate those core positions.

And I would put it the other way. We've actually stated publicly, James, that if our operating subs being Great West Life and IGM needed capital to do a transaction, that would actually trump buybacks. And we have done that I'm not saying it would stop buybacks, but if we came to a point where, you know, Great West Life in the past, we've supported them when they've had major equity issues to do. They haven't done one in, you know, it's been well over a decade. But there have been times in the past where they need to do a transaction and they need to raise public capital. And we've jumped in and put $400 or $500 million as a kind of underpinning of an equity offering. and we would prioritize that. And if that meant we had to suspend buybacks for a few quarters or something, I think we'd probably do that. So that is a priority, supporting those businesses. It just doesn't happen that often, and then I'm going to flip the question around and say, looking at Great West Life, they've got lots of capital on the books, and would they actually need us to do something? And they haven't for a long time. They spent $10 billion Canadian dollars in uh 20 and 21 buying personal capital mouse mutual and true and didn't need any equity capital to do it they've got a lot of capital but if it came to that that would be right at the top of the list our priorities great thank you and the next question comes from graham riding with td securities please go ahead

Hi, good morning. Jake, I guess this question is probably for you just in terms of timing. Does that GBL dividend come through in Q2? And then I think GBL is also cancelling some shares in Q2. Does that increase your relative ownership or do you sell some of your GBL shares into that buyback program?

So simply yes and yes. So the dividend will come in during Q2 and I believe they cancelled just north of 5 million shares. and that will increase our ownership position. We did not participate in the buyback.

Okay, great. And then, Jeff, just on Wealthsimple, does it need further capital at this point, or is it now at the point of sort of being self-funding and then going forward? Does it make sense to have Power Corp's sort of broader ownership of Wealthsimple split across sort of Power and IGM and Portage, or would it make sense at some point to consolidate the ownership into one of your entities or within power.

Your first question in terms of needing capital, I don't see the need right now. Basically, they're right around break-even. You go through the first quarter, they spend a lot on marketing, they get into a slight loss position, but they're at the point where their revenues are just about equal to their costs and their revenues keep growing quickly. But, you know, you never say never. They could come, who knows whether they come forward with something that they want to do. But at this point, we're not anticipating a capital need. The answer to your second question is, you know, it probably at some point makes sense. But I don't want to get everybody speculating that we're kind of focused on that because I don't see that happening in the short term. It's not something we're spending much time about, focused on. It came about through historical reasons. I think I have explained that. Before when we launched the FinTech strategy in 2015, Wealthsimple was a different part of that FinTech strategy. It wasn't about investing in 50 different FinTechs to get visibility as to what was going on and then hopefully have some of those capabilities be embedded in Great Western IGM. That was the Portage strategy and it's been highly successful. We saw Wealthsimple as something that could be a long-term part of our portfolio and we put $300 million into it before taking some money off the table in a subsequent secondary. But the first few rounds of that, it was really a power financial strategy and we financed the first few rounds. As the things started to get going, the IGM management team and board really started to focus on the fact this could be a real business, this could be a very successful business. and maybe it belongs in our portfolio, and they funded the, I can't remember, it was rounds three, four, and five, or rounds four and five, it doesn't matter. So, the first rounds got funded up here, the second rounds, they jumped, said, we'd like to get part of this, so we said, great, and we've ended up with it in two places, and so that's the history of it, and, you know, at some point, it'd be nice to put it in one place, but I would not be out there Kind of telling people to do whatever with your recommendations based on holding your breath. We saw an opportunity to do that at some point. We'd like to do that, but it's not high on our priority list right now. Okay.

Yeah, that makes sense. There's some good growth there, and I just wonder if it sort of gets lost a little bit when it's split across so many different entities. Probably. Thank you.

Mariam, I think your observation is right. I think that's a fair observation. Thank you.

There are no further questions. I would like to turn the conference back over to Mr. Stephen Hung for any closing remarks.

Thanks, everyone, for joining us today. Following the call, the telephone replay will be available until August 6th, and the webcast will be archived on our website. We look forward to talking with you next quarter. This concludes our call, and have a great day.

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