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Q & A Highlights

Q: Is there more that Power Corporation can do across platforms like Great West, IGM, and Power to surface value, especially with Empower's involvement in the alt business? A: R. Jeffrey Orr, President and CEO, explained that Power Corporation actively encourages collaboration between distribution and manufacturing platforms. While Empower's announcement includes Segard, distribution platforms must remain competitive and cannot solely rely on internal products. The focus is on ensuring competitive products are available, but distribution platforms must also engage with third-party offerings.

Q: Can you provide details on the acquisition of Segard, including employee retention and whether it focuses solely on private equity LPs? A: R. Jeffrey Orr stated that financial terms are not disclosed, but emphasized the importance of employee retention. Segard ensures cultural integration and financial arrangements to retain talent. Jake Lawrence, CFO, confirmed that the acquisition focuses on private equity, specifically secondary markets.

Q: How does Power Corporation balance share repurchases with investing in Segard and Power Sustainable, given their growth potential? A: R. Jeffrey Orr explained that dividends from Great West Life, IGM, and GBL fund Power Corporation's dividends, while buybacks are funded by other sources like asset disposals and returns from alternative asset management strategies. The focus is on using third-party capital to grow platforms, while buybacks add value by reducing the share base.

Q: Is there anything to read into the reduction of the NCIB from 25 million to 20 million shares? A: R. Jeffrey Orr clarified that the reduction does not indicate a change in strategy. The company aims to maintain the same level of buybacks as in previous quarters.

Q: Does Well Simple require further capital, and does it make sense to consolidate ownership across Power, IGM, and Portage? A: R. Jeffrey Orr noted that Well Simple is near break-even and does not currently require additional capital. While consolidating ownership might make sense in the future, it is not a current priority. The historical reasons for split ownership were explained, and any consolidation would be considered opportunistically.

Q: How should we think about buybacks if Power Corporation's cash position falls below the $850 million threshold? A: R. Jeffrey Orr stated that the company is committed to maintaining buybacks and has various tools to manage cash flow, including asset disposals. The company does not foresee cash constraints impacting buybacks and has plans to liquidate assets to maintain liquidity.

Q: Does the GBL dividend come through in Q2, and will GBL's share cancellation increase Power Corporation's ownership? A: Jake Lawrence confirmed that the GBL dividend will be received in Q2, and the share cancellation will increase Power Corporation's ownership as they did not participate in the buyback.

Q: How does Power Corporation prioritize supporting operating subsidiaries like Great West Life over buybacks? A: R. Jeffrey Orr emphasized that supporting operating subsidiaries is a priority, especially if they require capital for transactions. While buybacks are important, they would be adjusted if necessary to support subsidiaries' strategic needs.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.