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Canadian CI Financial: Completes $72MM Bitcoin Fund IPO

Bloomberg | Kevin Orland | Dec 16, 2020

Bitcoin fund IPO - Canadian CI Financial:  Completes $72MM Bitcoin Fund IPOCanadian mutual fund manager CI Financial Corp. completed a $72 million initial public offering of a Bitcoin fund to help clients access the cryptocurrency in the midst of an eye-catching rally.

The IPO consisted of units sold at C$12.88 ($10) apiece, CI Financial said in a statement Wednesday. The CI Galaxy Bitcoin Fund’s shares will start trading in U.S. and Canadian dollars on the Toronto Stock Exchange.

The fund enables CI Financial’s clients to hold the cryptocurrency through their existing investment channels without needing to venture into new accounts or platforms, CI Financial Chief Executive Officer Kurt MacAlpine said. The offering attracted interest from a broad range of backers, including institutions, individuals, high-net-worth investors and financial advisers, he said.

“Having a product that can be bought directly -- it can be bought through their financial adviser on behalf of them -- it just makes their life a lot simpler than having to address their desire for Bitcoin via different structures and wallets,” MacAlpine said in an interview.

The IPO comes as investors pour into the digital currency, prompting its value to more than double this year. Bitcoin has gained popularity as a hedge against U.S. dollar weakness and as investors seek to bolster returns amid rock-bottom interest rates. On Wednesday, it surpassed $20,000 for the first time.

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Toronto-based CI Financial will manage the fund while investor Mike Novogratz’s Galaxy Digital Capital Management will be Bitcoin sub-adviser. The New York-based firm will also execute all Bitcoin trading on behalf of the fund. The IPO was led by CIBC Capital Markets.

Mainstream Acceptance

For Galaxy, partnering with CI Financial helps legitimize an asset class that has long faced skeptics but gained broader mainstream acceptance more recently, Novogratz said. CI Financial, Canada’s largest independent mutual-fund manager by market value, was founded in 1965 and had C$215.6 billion in assets under management as of Nov. 30.

“It’s an institution joining the space,” Novogratz said in an interview. “It’s not just the investors, it’s institutionalizing the entire space.”

The closed-end fund will invest directly in Bitcoin, with its holdings priced using the Bloomberg Galaxy Bitcoin Index, and is designed to measure the performance of a single Bitcoin traded in U.S. dollars. The Bitcoin held in the fund will be stored in a segregated cold-storage system, and investors will be able to redeem the fund’s units at net asset value on an annual basis.

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Since joining CI Financial as CEO in September 2019 from WisdomTree Asset Management, MacAlpine has been expanding the company’s offerings beyond its mutual-fund business, including liquid alternatives and private equity. CI Financial also has been buying U.S. firms that handle investments and offer advice to affluent clients to help boost profits from its wealth-management segment.

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