Power Corporation of Canada ($POW)

Good morning, ladies and gentlemen, and welcome to the Power Corporation Fourth Quarter and Year-End 2025 Earnings Conference Call. [Operator Instructions] I would like to remind everyone that this call is being recorded on Thursday, March 19th, 2026. I would now like to turn the conference over to Mr. Steven Hung, Head of Investor Relations for Power Corporation. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and thank you for joining the fourth quarter financial results call. Before we start, please note that a link to our live webcast and materials for this call have been posted to our website at powercorporation.com under the Shareholder Results Reports tab. Please turn to Slide 2. 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 3 for a note on the use of non-IFRS financial 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.

Okay. Thank you, Steve. I'll pass it right along to Slide #5. And I guess my overall comment is that we have -- excuse me, we can go over to Slide 6, excuse me, that's my error. Thank you. I think a very, very strong quarter, strong earnings growth from those parts of our businesses that are earnings based, strong contributions from the businesses that we have that are more valued on an NAV basis, strong capital generation, strong return of capital to shareholders and then a number of moves that we made from a leadership point of view. I think it was -- the quarter was strong and the year was strong. I would characterize them in a very similar fashion, just strong value generation, all parts of the strategy kind of coming together and contributing to value creation. A little bit of noise in the earnings as we sometimes get coming from some consolidating adjustments and some other parts of the portfolio, GBL, et cetera. We'll have -- Jake will walk you through some of that. But I'm really, really happy with what -- how we finished the year and with the year overall. And with that, Jake, I'll pass it to you, and you can go through the results.

Great. Thanks, Jeff, and good morning to everyone joining us today. I'm going to start on Slide 8. And as Jeff noted, we're very pleased to report strong adjusted results for the fourth quarter and as also noted for 2025. Looking at the quarter, adjusted net earnings were $867 million, which is up 5% year-over-year. On a per share basis, the Q4 adjusted net earnings were $1.36, which is up 6% from Q4 last year. When we look at the contributors, Great-West contribution to Power's adjusted net earnings rose 13% year-over-year. The positive results in the quarter were supported by Great-West's seventh consecutive base earnings over $1 billion in a quarter. And this includes double-digit growth in the U.S. and a notably strong quarter in the Capital and Risk Solutions. These strong results obviously supported some more return on capital from Great-West, which announced an increase in its quarterly dividend of 10% to $0.67 per share. IGM's contribution to adjusted earnings were also quite strong, up 22% year-over-year with strong IG Wealth and Mackenzie net flows. AUM&A were up 15% year-over-year and 3% quarter-over-quarter. IGM announced an increase to its quarterly dividend of 10% to $0.62 a share. It's also worth noting the performance of some of the strategic investments at IGM. During the quarter, Rockefeller completed its previously announced transaction and IGM received total proceeds of $394 million (sic) [ $394.2 million ] primarily compromised as a return of capital as well as an equity sale. Partially offsetting the results this quarter was a net loss of $15 million from GBL's contribution to Power's adjusted net earnings. The performance in the quarter was due to fair value losses on the GBL Capital portfolio, while previous periods included significant gains and higher contribution from GBL's operating companies. GBL recently announced that it has completed 95% of its $5 billion portfolio simplification target, which it communicated in its midterm strategic plan update back in November of 2024. GBL also announced a 2.5% dividend increase to EUR 5.125 payable during 2026. Contribution to the corporation's net earnings from GBL was a loss of $195 million, which primarily includes the share of impairments and other charges related to GBL's investment in Imerys and additional losses on the partial divestment that I mentioned at the GBL Capital portfolio. Moving to our alternative investment platforms. Sagard's contribution to adjusted earnings was $26 million. This is up from a loss of $11 million last quarter and down slightly from $33 million in the prior year. The increased contribution from Sagard in the quarter was mainly driven by fair value increases in private equity and venture capital. Power Sustainable reported an adjusted loss of $21 million compared to a loss of $16 million in previous quarter and a loss of $43 million in the prior year. This is driven by operating losses related to energy infrastructure. Moving to our corporate operations and other line. The loss increased this quarter, driven primarily by foreign currency translation on our euro and U.S. dollar cash balances, while the corresponding period included foreign exchange gains. Also in the quarter, we had some higher employee compensation costs. Overall, we're pleased with our group's strong fourth quarter results, and it caps a strong 2025, and we're pleased with the momentum we're moving into 2026 with. Turning to Slide 9 and our net asset value. We reported adjusted net asset value per share of $85.77 as of December 31st, 2025. First, I want to highlight that 84% of Power's gross asset value continues to be driven by our earnings-based businesses, Great-West and IGM, and that's up from 76% at the reorganization back in 2019, 2020. Second, Power experienced strong adjusted net asset value growth during the year, up 42% and up 19% quarter-over-quarter. All of our publicly reported operating companies experienced strong NAV growth year-over-year. Great-West increased 39%, IGM increased 35% and GBL rose 24%. Sagard's NAV increased 35% year-over-year, driven primarily by the fair value increase in Wealthsimple. Meanwhile, Power Sustainable saw a reduction in NAV over the course of the year, but that was related to asset sales that occurred in the first half that did increase our cash balance up at Power. Speaking of cash balance, our Q4 ended very strong at $2.2 billion with approximately $1.9 billion available when we factor in dividends to be received and dividends to be paid. We remained active in returning capital to shareholders through our NCIB program. And during the fourth quarter, we repurchased 5 million shares worth $329 million and 12.4 million shares in full year 2025. Power is well positioned and has delivered a strong return of capital with over $2.2 billion in share buybacks and dividends over the course of the full year 2025. And with that, I'll turn it back to Jeff.

Thank you, Jake, and I'll just roll forward here and make a comment on the leadership transition that we announced about a month ago. I am delighted with what we have announced and very confident that this is going to be extremely successful. First of all, I'll comment on James. He's probably well known to many of you, but he clearly has the experience. He's got the leadership. He's got the judgment. He's going to do a great job. He knows the company well. He has the confidence of the management teams. He's got the confidence of the Board, and I think he will be extremely successful. He has also got behind him to replace him in his role as CEO of IGM, Damon Murchison. Damon, maybe I think he's known to a number of you, a very, very dynamic leader, real change agent. He has incredible experience and knowledge of the Canadian Advisory and Asset Management space, spent a long time at Mackenzie, has been running IG Wealth and of course with a number of other players in different parts of the channel earlier in his career. And we're very, very fortunate to have Damon amongst our group, and he will also -- is well equipped to lead IGM. This announcement that we made, if you go back over the year and just go back 12 months, we also successfully had a leadership transition at Great-West Lifeco, David Harney successfully moving into the role of CEO that has gone extremely well. And you will recall that we also announced a year ago or so ago, Johannes Huth was taking over as CEO of GBL. So in a 12-month period, we've effectively managed CEO transition across the main operating businesses and at Power Corp. itself. And I'm going to be looking forward to helping James and the team in whatever way I can in terms of my knowledge and experience and ensuring that the transition is smooth and successful, and I'm very confident it will be. So that was -- we talk a lot about our results at these calls, but that was a very significant move. I would call it a classic power move in terms of the way transition works. I won't worry with the 50-year history, but going back to all the way to when Power Financial was created and James Burns and then Robert Gratton and then myself, it's always kind of these long planned out successions where you've got someone coming in who have already led parts of the businesses and get to know the network well and get to know the Boards well. And so this is what I would say, classic playbook for our group. So with that, let me then turn my comments to the results themselves. Great-West, just the beat goes on, I guess, is the theme that I would put, continued growth in earnings led by Empower, but contributions from across the different parts of the business. When you go through Great-West results, strong results from CRS as well. Europe actually contributed well, but there's a lot of work on capital efficiency. So I think the Great-West Life team mentioned that their results -- there was a less capital deployed in there. And so that had an impact, but they actually had quite strong earnings growth. So good contribution from across the group and continued good momentum at Empower. Very strong capital generation, obviously. The buybacks are going on. So very strong return of capital to shareholders. We're participating in that and then a dividend increase of 10% announced. So just kind of very continued success at Great-West Lifeco. If I turn you to Page 13, I know you've seen this slide, but this is almost 5 years. It was -- I think it was the spring of '21. So 5 years ago, they came up with their medium-term objectives, and they've met or exceeded all of those objectives. I think you know at their Investor Day last spring, they bumped the ROE target from what had previously been announced to -- from 16% to 17% up to 19%, and they introduced a base capital generation measure, and you're seeing that play through. It's strong. The earnings translation into cash flow is very strong at Great-West Lifeco. I think one of the things I want to point out, though, is if you go and if you have the time, look at the annual growth in base earnings in the last 5, 6 years, it's really, really steady. This has not been kind of 3 years of flat and then a big jump. It has just been steady growth, and it's obviously not perfect. I mean it's not like it's 12% every year, but it's very close. And so it's just kind of steady growth in earnings and performance, very, very impressive. So really pleased with that. I'll turn to IGM. IGM, this was the year, I would say, where IG Wealth and Mackenzie, the earnings drivers at IGM versus the strategic portfolio broke out with strong earnings after quite a few years of going up and down, but mostly sideways as they've been investing in change in their businesses. You know that the wealth and asset management businesses in the retail space in Canada in the last 5 years have been mostly in outflows as we -- if you go back over the last 5 years, we had that bump coming out of COVID where inflation jumped up, interest rates jumped up. And unless you're in the ultra-high net worth, high net worth space, basically Canadian households were not saving. They were dissaving and the savings they were doing were going into deposits and moving out of risk products. That's finally come back in the past 12 months, we're starting to see the sector get into growth. And so you had flows kind of not being a friend of the business, but internal momentum at the business and changes that they've made together with flows getting back in and markets helping and you've had a breakout year for earnings, which resulted in the first dividend increase that IGM has announced in over a decade, which is really nice to see. So -- and then good market share gains and good underlying strength in both IG Wealth and Mackenzie. So the earnings part of the portfolio -- of their portfolio performing well. And in addition to announcing a dividend increase, they also are returning capital to shareholders through buybacks. And so that was the first time we've seen an aggressive buyback like that. So lots happening on the earnings side. And if we flip the page to the strategic investments, in these businesses, if you go back, I think in terms of the reported value, there's something like $6 billion of reported value right now that IGM has, if you look at their material. Go back 5, 6 years ago, that was $900 million. It was less than $1 billion. This has been a big change. While the earnings parts of the businesses, IG Wealth and Mackenzie have been invested in and transformed this part of the portfolio, which really sets up the growth in the next 5, 10 years has really been performing well. And we've got a portfolio of very exciting businesses here. Wealthsimple, which is the biggest part of our ownership is at IGM, just a very, very strong growth. You see the AUA growth there year-over-year. Rockefeller continues to perform exceptionally well. And then China Asset Management has been -- has also been gaining market share in China and then Northleaf had a very strong year. So we've got -- IGM has 4 very, very strong businesses here, and they're not contributing a lot to earnings right now. But I can imagine going out many, many -- several years from now, during this call, we would expect that they're going to contribute. And you see that on the next page because IGM did come out 2 years ago with medium-term objectives, and they have the higher growth even in the next 3, 4, 5 years coming from the strategic investments. And to date, 2 years after coming out with the guidance, they are ahead of the objectives that they announced publicly. Quick comment on GBL. GBL actually delivered a strong TSR over the last -- in 2025. Jake commented on the fact that in the fall of '24, they came out with an objective of EUR 5 billion of assets they want to sell. They've effectively completed that. They also then announced that the private assets where they've been moving their portfolio that the indirect private assets that they have in GBL Capital and Sienna are also going to be -- that's no longer part of the strategy. They're basically going to be disposing of that. Some of that is in the EUR 5 billion. But most of it is not. And so there's still lots of assets to sell there. So they are selling their indirect private assets. They're winding down over time their public portfolio and getting much more concentrated on direct private. And while they're doing so, they're aggressively doing share buybacks. And they also announced an increase to their dividend to EUR 5 and EUR 8, subject to shareholder approval for 2026. Remember, they had an 80% or 90% increase in the dividend last year. Okay. My comment on each of the 2 alternative asset platforms. Big year for Sagard. Everything is in Canadian dollars here until we get to this slide, Sagard reports their AUM in U.S. dollars on the lower left -- right-hand corner, excuse me. You see year-over-year Sagard, they ended the year at USD 27 billion under management. Pro forma the Unigestion acquisition that they announced last year. They will get to $47 billion on the closing, and we think they're very close to closing that transaction. And so strong growth through acquisitions. BECCS Capital was also announced acquisition and then in BECCS and performance management going to -- actually, I'll say in a minute what they're doing with those 3. So strong growth by acquisitions, but also USD 3.5 billion in new commitments, so successful fundraising. And they're pulling on every string, I would say, to get growth in what is a challenging market for fundraising in the alternative space, acquisitions, partnerships and also fundraising. So in the upper left-hand corner, the Sagard Private Equity Solutions, effectively, they're combining Performance Equity Management, BECCS Capital and Unigestion, which is a mid-market European-based private equity firm. And these are basically solutions providers. So they're not kind of single sleeve managers for the most part, where they're running out and raising a fund in over 5 years, buying 10 companies and then returning it. These are -- they're basically buying positions in other funds, putting fund of funds together, taking direct participations in individual companies from time to time when they're investors in some of those funds. And so they're managing a multi-asset portfolio of mid-market companies and then packaging them together in either separately managed accounts for institutional investors or into funds for individual investors. That will be, I think, a $22 billion or $23 billion secondaries solutions provider when that -- when those 3 companies come together following the acquisition of Unigestion. Okay. Power Sustainable. Power Sustainable is not -- its assets are much, much smaller, obviously. But just a reminder, when we announced the reorganization at the end of 2019, start of 2020, there were no products in Power Sustainable. We had a portfolio of energy assets that were being developed and managed on behalf of Power Corp. So all of these products that you see on the page there have been created. Teams have been hired and fundraising has been done. And we now have 4 very attractive products, very strong track records, very experienced teams. Fundraising has been difficult, but they made good progress in 2025, still looking to get more scale into these strategies, but we're at a point here where we've got 4 very attractive strategies. And we're optimistic that we're going to deliver a good return for shareholders, certainly, and we're hopeful that we continue to make success on fundraising. I turn to Page 20. We have got here the return of capital, Jake mentioned, the increased buybacks at the -- in particular, in the fourth quarter. In 2025, we're participating in Great-West Lifeco's NCIB. We end the year with a very strong cash position, and we are going into 2026 with, I think, more cash than we've had since I can -- well, maybe ever actually, I'm not sure, but I can't remember us having this much cash balance. So we are looking to that. And if you can flip forward on the page and my favorite slide to love or sometimes to not love is the power discount to NAV. And with a discount at 20%, we have successfully moved it down in the last 6, 7 years with our strategies, but it's certainly not a straight line. And when you get people deciding they're going to take profits or whatever and we end up with some pressure or the stock doesn't do quite as well, it gaps out. And I initially react by going, why is it not at 3% that's where it should be based on my math. And then I turn around and go, no, that's just an opportunity for us because we're sitting on large cash balances and hopefully, others out there look at it as an opportunity as well to buy into a portfolio of companies that are doing extremely well and buying them at a discount. I sound like a retailer there at Walmart or something like that, but stocks on sale here is [ 20%]. I'll let you make your own judgments on that. So then turning the page to Page 22, we have basically since our TSRs for shareholders over various periods going back to the reorganization and the restructuring that we announced and the reorganization, I should say, and we have delivered strong and competitive shareholder returns. The final page is Page 23, here looking ahead, I think we're in a very strong position to continue to drive value. We've got earnings growth from the -- the main part of the portfolio, which is earnings based, which is now bigger than it was 5 years ago. I think I mentioned explicitly, we had as a strategy to have less NAV-based. Good NAV-based businesses that set the stage for the future, but we were trying to increase the portion that was earnings based. We've done that. So those -- the Great-West Life, Mackenzie, IGM, the earnings -- IG Wealth Management, excuse me, the earnings portions are in strong position to drive earnings growth. That, together with the NAV part of the portfolio will continue to drive our NAV growth. We've got strong cash generation across the companies. I think Great-West Life and IGM are both reasonably valued. I think Great-West Life, given the growth it's delivered, the strength of the balance sheet, it's based on the forward multiples of the Street estimates, they're in the mid-11 multiple in '26 earnings and lower than that for '27. IGM's multiple to put any reasonable value on the strategic portfolio and it's trading at a low P/E. And then we're trading at 20% discount at the Power level. So I think as you look at the value that we have created in the last 6 years, it has not been based upon a run-up in our valuation. We are still extremely well valued in terms of the parts, and we're trading at a discount in terms of our NAV. So I think that we're well set up to continue to drive good shareholder returns. And I guess another way to look at it, and I maybe end on this point is that if you're buying power today, there's 0.98 of a Great-West Life share for every share of power that's outstanding. That's what we own, not [ with ] outstanding. Power owns 0.98 of a Great-West Life share. I think last night, Power closed at 66.59 and Great-West was 64.50, something like that. So they're almost trading at the same price. You're getting almost one Great-West Life share and everything else, you're getting to Power Corp basically for nothing, which is all of IGM and all the other assets, net of the pref shares. And so it's -- that's just another way of saying we don't have -- we've got a reasonable valuation here and a good opportunity to continue to drive shareholder value. And with that, operator, that would conclude my remarks and be happy now if you turn the lines open and we can entertain questions from -- that may be there. Thank you.

[Operator Instructions] The first question today comes from Graham Ryding with TD Securities.

Maybe I'll just start with more of an earnings-related question just in the quarter for Jake, just the consolidation offsets, that was a bit of a drag on the EPS this quarter, and I think it was also a theme last quarter. What drove the consolidation offset this quarter? And is this a -- should we view this as more of one-off noise? Or is this something that should be recurring?

Yes. Graham, thanks for your question. So yes, I view these items in particular, as largely one-off. So the consolidation impact was about $0.07 this quarter on the number. It is almost entirely related to fair value changes, and that's based on timing recognition of some of the investments that are within the group that were made down at Great-West and IGM. And so we're going to do some work to try to smooth out those timing differences. But yes, I view that as largely onetime in nature.

Okay. Sounds good. You can't do a conference call without discussing AI. So maybe, Jeff, I can sort of just ask you, how much time at the Board level of Great-West and IGM are you spending on looking at how those businesses are positioned to both leverage AI on your front foot and also defend the businesses against any AI-related competitive forces? Just maybe some high-level thoughts on how you're feeling about those businesses.

Graham, thanks for your question. It's a great question. And the answer is a lot at the Board level, a lot at the management levels all the way through the organization. We are absolutely focused on it. The management teams are focused on it. So what I would say is, first of all, from an organizational point of view, each of our management teams own the issue. So you go into Great-West Life and the champion of AI is David Harney. It's from the CEOs you get nothing done unless the CEOs prioritize the issue. We have that within our group companies. As well at Power Corp, we are attempting to coordinate and have the groups benefit from common learning because we have about a 5-point strategy across the group as to how we're going to tackle AI and what we are tackling. I shouldn't use the future tense at this point, what we're doing. And 2 of those are kind of common as to -- we've got a theme on the senior leadership and executives getting proficient at AI. We've got a whole effort on doing that so that we're kind of not -- that people know what they're talking about when they're engaged in it. And we also have a learning part of the strategy, which is going around and visiting competitors around the world, suppliers. And that earning process is also one that we're trying to coordinate and not have every company duplicate on its own. Once you go from there, there's an exercise of mapping across all of the business units, what the opportunities can be and sizing them up so that we're into an exercise of prioritizing. And then we have exercises going on across the group that I would call them more pilots, but they're actually putting things into play in different parts of Great-West Life and IGM, and we're using different suppliers, outside suppliers, testing who's good, who's not, how is it working, people -- the various names that you would hear as opposed to using one supplier, we're trying different ones and then seeing how we work organizationally to put those into place and put the changes in process into place. So that's what we're doing about it and prioritizing. And then you ask me for a comment and a perspective. I think this is -- in the first instance is going to be -- in some ways, you could say it's similar to fintech and then I'm going to say how it's not. But 10, 11 years ago, we saw fintech as, oh my goodness, what's going to happen? Is this going to hurt our incumbent businesses? And you know how we responded. We responded by doing some things external -- by setting up some things like we set up a venture capital fund to invest in fintech, all our companies in place and put the management team in place. We started a basically an incubator fund out of Montreal, where we founded a number of companies, some of which have gone public. And then we made a couple of bigger bets in fintech through Wealthsimple and in the States through Personal Capital, which is now part of Empower bought that. And of course, we still control Wealthsimple. We responded and many of the products that came out of that are now in our company. So Nesto is going to end up being one of the biggest mortgage administrators and managers in Canada. And guess what, IG Wealth was the first company to put it in place. But it's a company called TD. I don't know if you know them, Graham, but they're, as I say, with a smile on my face. But Nesto is basically going into the banking channel now and also going to be supplying that. Same thing with Conquest Planning. So we had all this fintech strategy. We're looking at AI as a comparable. It's an opportunity. And at the same time, you ask yourself the question, is it a threat? Is it going to displace some of our businesses, and we're thinking about it that way. We're taking it as seriously as that. And the last thing I'm going to say is I do think it's going to be a while. We, like many others that I talk to are looking at the opportunity, but not too many people have translated those opportunities into savings yet. And I think it will be a while before you see actually P&L benefits. And then my own view is even when you get cost efficiencies and better client experiences, which is the 2 things you're going to get out of it, I think a lot of the savings will end up becoming -- it's going to be coming table stakes. So I don't know that at the end of the day, you're going to see increased margins. I think you're going to have -- my own view is ultimately, it's going to -- everyone is either going to get good at this or they're going to be in a lacking a competitive position. And I think, therefore, the margins will be what the margins will be. But I don't view it as a massive profit opportunity. And if people are selling it that way to their shareholders, and I don't share that view. I think it's just something you've got to do to remain competitive. And then we're in a competitive world, the margins will be what the margins are. So that was about as complete an answer as I can give you. I just went right through the whole thing. That answers your question.

The next question comes from Tom MacKinnon, BMO.

On Slide 27 of your investor presentation, some questions about the Power Corp earnings from investing activities of Sagard and Power Sustainable. You talked about a 10% plus return on the $3.2 billion in proprietary capital. We kind of look at what that $3.2 billion was is $2.7 billion at the beginning of the year. And so that would be at least $270 million in terms of investing activity earnings. But if I go into the SIP, we're not getting kind of near that. The investing activity earnings on Power -- on both -- on Sagard and Sustainable are certainly less than that and in fact, were negative in 2024 and 2023. Is there anything that we're missing here? Is this predicated on monetization? Or does that have an impact on this 10% kind of return? like why wouldn't.

Tom, I'll start off, Jeff, feel free to add in, if you like. Thanks for your question, Tom. So on Slide 27, you'll note the $3.2 billion, and it has grown. It is AUM, and it is the fair value of the investments. And as you'll note, there's a variety of strategies. And so those strategies have different return profiles and different return expectations, and we've tried to under the target net IRR, lay out the return expectations. But in terms of the return profile, you can expect something like a private credit to have more of a stream of income that comes in over time, well as other investments like venture capital and private equity, which you can see are a large portion on the page, they're going to have more episodic as it relates to monetizations and other activities. You will see the value, and we tried to spell that out in the wheel on the left-hand side of the page where you've got capital appreciation versus pure income strategies. You will see as we fair value these, the increase will go up, but it doesn't always show up in the P&L or in earnings in the quarter. But it is creating value, and that will be realized and monetized over time.

So let me add to that, and I agree with what Jake said. This is not intended to say those are the earnings that we're going to drive. That's the returns we're going to drive. But even on the income side of the picture, let's look at Energy Infrastructure, which is our energy fund, for example, energy equity fund, we're getting a cash return, and we've had an NAV bump on the portfolio. But the assets in that, that were brought under production in the last 3, 4 years, from a net income point of view. And this one, we happen to own a big chunk of because we moved our energy -- back for a second. We moved our energy portfolio and we created a fund, and we own about 40% of the fund, I think, in this case. So we're consolidating this one. And so we put all these energy assets into production and there's big depreciation going on. So we actually have net income losses. So that fund is producing losses in the seed capital portfolio, but creating positive cash flow every year, and we've had NAV bumps that have been going through the NAV. So there's a perfect example. We have losses going through the P&L, and it's going to make its 8% to 9% IRR. I think it's been doing better than that since we've been in it. So it's a classic case, Tom, where we've got a portfolio of assets here that are not driving earnings, but they are, we think, driving value creation.

Yes. Understood. So sort of a geography answer to some extent there. The second question, just if I may, is really just on Page 13 of the SIP. You've got -- despite the fact that Sagard has got some bigger assets, the fees went up, but certainly didn't go up as much as the investment platform expenses. So still negative fee-related earnings. What's contributing to this negative operating leverage? And when we might be able to see some fee-related earnings at Sagard and Sustainable going forward?

So there's been strong growth in -- it's a very good question. And at the high-level question is that Sagard is looking to grow. And it is adding strategies, adding in all the ways I've told you, adding strategies, making acquisitions, adding and trying -- it's getting itself up. It's 44 -- I think the Canadian equivalent of what we talked on the slide is USD 44 billion pro forma Unigestion, and they have publicly stated a goal of getting to $100 billion. And so they are making and Paul III is making an aggressive move to get Sagard to be a scale player, although focused in the mid-market. You may say scale, $100 billion. I thought Apollo had USD 800 billion versus [indiscernible] $100 billion, how could that be scale? This Sagard is much more focused on mid-market and $100 billion in mid-market would put you as a very strong player globally. So he's prioritizing growth to get to being a viable long-term mid-market player, strong mid-market player. And every time that you do that, you end up with you're adding teams, you're adding costs. I think the last number and look around the table to correct me, I think the run rate fees at this point are USD 190 million. So you go back, it was USD 18 million when we launched the Strategy 6 years ago when we said we're creating an alternative asset manager here. It's up from $18 million to $190 million just on the fees over a 6-year period. So you can't argue with success. I think they're doing an amazing job. But here, I'm going to play back the discussion, Tom, to you, and hopefully, it resonates when you say, okay, so Power is earning $3-plus billion, we're creating a company where the GP stake of Power in Sagard has grown in value from virtually nothing to over $300 million. Big, big growth in the value of GP. We've made money on the seed capital. We've got Carry. And I'm trying to build a $100 billion manager and you're asking me to produce $5 million of FRE for the shareholders of Power Corp. versus a $5 million loss. Well, I'm trying to build -- are you looking at this for the wrong end of the telescope and you go, no, you should continue to build, but don't create big losses. How it comes out in any given year, I think they're trying to target to breakeven, but you get some fundings that are a little late or something, you don't quite hit the mark, but he's not far off. So anyway, that's maybe a longer answer than you wanted. They're doing a great job. I agree with the objectives. I agree with the strategy. And that's another way of saying I wouldn't expect even if FRE gets a little positive in a given year, I wouldn't expect it to be a big contributor to Power's earnings in the next few years. We're not looking for it to do that.

Okay. And same for Sagard or same for Sustainable?

Yes. Power Sustainable is in a different situation. I think they've got -- they're lacking scale at this point because they're earlier -- I try to convey that. They did -- we had great products and they built great products, but they've run into -- it's not been the easiest time to fund. And so they've got larger losses from an operating point of view. So that's a bigger challenge, and I think we have a bigger need there to get scale into those strategies. But they do have very attractive strategies. They're very, very focused on getting more funding into it. We have made good returns on the seed capital. So not -- and that was the one I explained even though we appear to be losing money on the seed capital, we're actually making money. So -- and we've got some Carry on it as well. So it's not like the overall picture of our seed capital, the losses we're making at the GP, but the Carry we're getting economically, that looks a lot better than just if you look focus on the run rate of the FRE. But having said all that also, I think we have a bigger scale issue. It's not exactly the same answer. We have a greater need to get more assets to get Power Sustainable to a point where it's up and it's got a decent P&L. It's not there yet. Still a work in progress on that one.

The next question comes from Doug Young with Desjardins Capital Markets.

Jeff, I just want to go back to Slide 2021, and you continue to tender into the Great-West buyback, but not all the cash that's coming in is being used to buyback Power shares and that's kind of funneling into the build-out of your cash balance. So what's the strategy on holding more cash? And to your point, the discount to NAV has come out quite a bit. Why not be more aggressive on buybacks? Or is there kind of an effort to hold more cash at the holdco? And if that's the case, why?

It's a great question, and we talk -- we're having the same discussions internally. I think the cash came at us more quickly probably than we should have expected it, but we've let the cash balance grow. And I think that coupled with where Page 21, I think we will be looking to be -- our top capital priority here is going to be to buyback shares. I think that's the answer. And we do think the cash balance is quite large. So I agree with your observation, and I agree with the opportunity, and we intend to be aggressive on the buybacks. It's a good question.

Okay. So there's no binding constraint that I'm missing and why?

No. Yes. It's just timing and timing of when we receive the money. We're continuing to receive the money. Also, can I -- I will remind you that it wasn't clear Great-West Life Board and hadn't decided what they announced in terms of the buybacks for 2026. And we got -- so we were building up the capital late in 2025, wondering how long that was going to go for? And do we kind of spend it all at once? Or do we kind of feather it out over the next -- like some of those -- and we got behind the curve and then they announced they're continuing to do it for another year and all of a sudden, the cash is going to continue to come in and now the cash balance is growing. And so we're getting with the program here, and we've got a lot of cash on the balance sheet, and that's not an intentional -- it wasn't an intentional outcome. It just happens to be where we are. And looking at Page 21, I think we will get more aggressive on the buyback side.

Okay. And then are you proportionately tendering to the IGM buyback?

Yes. That was -- oh, to the IGM, I'm sorry, I thought you said Great-West. No, we are not. No, excuse me, pardon me, the answer is no. I had a look from Jake here when I said yes. He almost pulled me off the stage. No, I thought you said Great-West. No, we are not in IGM. To remind you, Great-West Life asked us. We didn't initially do so. They came to us and said we would like you to do that, and we looked at that and considered it and said, fine, we will do that. And so now we got the cash coming in, but we've not had that discussion with IGM.

Doug, I think it's something we can look at over time. I think -- sorry, it's Jake. I think it's something we can look at over time. But as you've observed, we've got a strong cash balance now. And I think as Jeff noted, job one is to take advantage of the opportunity that the market presents us, and then we can revisit if we need other sources of cash.

Okay. And then just one last one, like operating expenses, I think you referred to it in your remarks, but $60 million was up last quarter versus last quarter last year. Any unusual items that's going through this quarter that we should think about? Or is this kind of a new run rate? Is it hiring? Is it technology?

Yes. Thanks, Doug. It's Jake again. So I think good observation. Both Q4 and '25 had some higher costs related to employee compensation. That would have been the bigger driver. And I think specifically, those costs are related to performance-related compensation or long-term incentive. And so we don't expect them to occur to the same magnitude in 2026. And so as we move into the year, we've taken some steps to tighten that up a little bit and make sure we don't see that same bump up. So I don't view it as a new run rate and our expectation in '26 is to see that come down a little bit.

We don't have a lot -- we haven't actually driven the costs of the head office is up in terms of -- it's gone up a little bit. We've got some -- we've had some inflation. We certainly hired a lot of great people. The talent has never been better here. So there's been some and very happy, terrific investment, but not to the magnitude the costs have gone up. It's really been performance-based equity-based compensation, some of which was issued in previous years. And then we've had great performance, all the metrics we have internally, the stock price has done well. And so it's really from the TSRs that you've been seeing and some of that has been shared with the management and the people here. And not all of that was properly perfectly hedged, exactly. It wasn't perfectly hedged. That's the best way to say it. But it's not because the underlying cost has gone up in a material way. It's gone up a little bit, but not -- it's gone up like the actual infrastructure hasn't grown. At all relative to the value. It has grown in low single digits in terms of number of people, et cetera.

Okay. So hopefully, that helps.

That's perfect. Appreciate the time.

The next question comes from [ Ramil Saba ] with Jefferies.

So my question is on capital allocation as well. So when we're looking at your power discount to NAV, it's been coming down from 35% to close to 10% at some point. At what point would you say that the discount is too narrow to continue allocating excess capital to buybacks and probably better to reallocate that excess capital to reinvesting into OpCos or publicly listed subs?

Ramil, thank you for the question. And you are correct. It's been a -- I think the discount started narrowing at the start of 2019 when Great-West Life announced it was selling its U.S. insurance business and in the press release said and would consider returning capital to shareholders, and we follow that up with a 3-way buyback that you may not have been around to follow us and then we announced the reorganization. And it's been a long road of our strategies, communication, changing the mix, and when it doesn't go on a straight line. But then where does it get to? My own math is the following. We have, call it, $200 million or so of expenses here at Power Corp after tax. That's a smaller number to a net present value on that, and that's the only real liability. You could put some pension expenses, I guess, if I was being complete on the balance sheet. You can get to a discount of about 3% is the way I do it, is basically -- because the pref shares and the debt are already in the NAV calculation. So there's a value gap when the discount is above 3%. But that's -- so it's -- there's a big opportunity right there. But the reason for the buyback is not simply to [ arb ] the discount. That's just a benefit that we happen to be getting right now. But even if the discount were to narrow down, it wouldn't mean we would stop buybacks. If we are getting capital coming in from participating in buybacks from Great-West Lifeco, for example, in the future, what they're doing is they're transferring their excess cash to us. And because on their excess cash, they're earning 2%, 3% and then they're putting the monkey on our back, if you will, by building up our cash balance. And in that circumstances, we -- if we have good uses of capital, we'll do so. We'll invest it, but we would also continue to buy shares back potentially in those circumstances. It's not just an NAV arb that we're doing. We're basically returning excess capital to our shareholders. So that begs the question, what are our capital priorities? Well, they've got to be on strategy. We've always participated and supported Great-West and IGM if they needed to do an equity issue for an acquisition or something. But that's happened, I think, about 3 times in the last 35 years. So that doesn't happen very often. And then we've got to be convinced that when we're investing in other businesses that we have, say, the platforms that we're going to get an adequate return and it's going to be properly valued in our share price. And so one other thing that's been happening is -- and I'll finish my comment on that is as we've been buying shares back over the last 6 years, the source historically here has been selling a lot of NAV-based assets, the stand-alone businesses, et cetera. And we've actually been changing the mix of our business from I mentioned earlier in the call, I think we're about 74%, 75% of IGM and Great-West Life in the mix. That's up to 84%. We did that explicitly. So I think we're also -- another thing when we're buying shares back, we're mindful of not kind of tilting the portfolio, if I can call it that, to being too much of NAV based because our shareholders, public shareholders tell us they're happy to have some of that, but not too much of it. So anyway, maybe I went into too many details for you, Ramil, but it's not just the NAV discount that we're [ arving ]. There's lots of other considerations when we do buybacks. That's my answer.

Yes, that's helpful. I'm just trying to understand how you think about capital allocation. That's helpful answer.

The next question comes from Scott Fletcher with CIBC.

I wanted to go back to the asset manager platform. So just asking about fundraising. It's been a while since the last earnings call. Just was hoping we get an update on the change in the fundraising markets, if they've strengthened or worsened for Sagard and by asset class, in particular, would be helpful.

I'm happy to kick off with some comments, Scott, and we can come back to you with by asset class. In the quarter, Sagard raised about $1.4 billion. And for the year, they raised $3.5 billion.

U.S. dollar in their case, yes.

Yes, U.S. dollar is a good point in their case. And so -- and I think we've seen that across several strategies. I wouldn't say quarter-to-quarter, we've seen any real change in the climate. And I don't think we've seen a change year-over-year, [ Frank]. There was a period where I think monetization did start to happen, particularly in large-scale public funds at some point of last year, but I think that started just with market volatility to dry up a little bit. So as Jeff noted in his comments for both Sagard and Power Sustainable, the fundraising continues to be tough, but creatively pulling on different strings and taking advantage of those opportunities to build scale through other means, whether it's partnerships, Sagard obviously announced the Baird transaction last year as well as with Sagard, the acquisition of Unigestion, combining that with Performance Equity Management and another acquisition BECCS to build that private equity solutions business that has primary private equity funds, secondary and co-ownership opportunities. So still a tough fundraising environment, but a solid year for Sagard with USD 3.5 billion raised during the period.

Okay. That's helpful. And then just as a follow-up, if you think about getting to that $100 billion target of AUM, is there an ideal mix between M&A and capital raising? Like how much should we expect that to be acquired? Anything there would be helpful.

I mean, I don't know that there's an ideal mix. I think it will depend on the opportunities that are in front of Sagard and what the fundraising environment is like and what the in a way, there's almost an inverse correlation. You can imagine when the fundraising isn't very good, lots of firms are growing and they're getting funding into their strategies and they're less inclined to look to do partnerships because they're having fun and they're getting there on their own. And so if we got back into a very healthy fundraising environment, you can imagine a lot of midsized players are saying, why would I sell out? I'm growing beautifully here and things are going well. You get into a tough environment, and now they're looking at their dreams and they're going, boy, it isn't quite working out the way I thought it was. Maybe I need to partner with someone who's got more scale. We can get some cost synergies, we can get some more fundraising on a broader platform, et cetera, and you get more of an M&A market. So I don't think you can overtrain on what -- how it's going to play out in the future because you don't have a crystal ball. And you just need to have all the tools and the tool set and be opportunistic as it comes. I think that's the real answer. I know Paul III and the team are going to use -- they're going to pull on every lever they have. That is the one thing I'm sure of.

The next question comes from Bart Dziarski with RBC Capital Markets.

I guess I'll stick with the asset management business. And just with Sagard private credit, there's lots of kind of noise out there today. I think lots of it is overblown, but there is about $8 billion of AUM in Sagard, and I think that has direct lending and CLOs. So can you guys just give us an update on what you're seeing on the ground in that portfolio or part of the business?

Jake, do you want to handle that one?

Yes. Maybe I'll just -- because we've covered seed capital as well in the conversation today, Bart, I'd just note that we're not concerned about our exposure that we have directly through seed capital. It's around $100 million in Sagard private credit funds, and we're very comfortable with it. As you know, they do have AUM exposed. I'll scope your $8 billion down to about $6 billion which is specific to private credit, which is predominantly, and I'd say the majority is institutional. And when we look at the portfolios, I think we get to a spot where we're comfortable and why we're comfortable is Sagard's strategies around these funds. They're conservatively positioned, and we're not seeing any concerns at this time. The default rates within those funds are not on the rise. And I think that's reflective of the credit team there Adam Vigna and other strong underwriting standards, their high-quality portfolio and low leverage. They have nearly 0 software exposure, and they've seen, as I noted, limited credit stress at this time. And they -- the way they approach the strategy, Bart, is they're first lien senior secured loans in the mid-market space, generally in kind of family-owned or founder-led companies with moderate leverage and pretty predictable cash flow. So we're not seeing stress at this stage, and we're quite comfortable with how the product is performing and actually feel pretty well. And there's obviously been a lot of coverage in newspapers, but that's not actually what we're seeing play out in the books that we've got exposure to here, both directly through seed capital and what Sagard is managing for their clients.

Great. Very helpful. And then one of the growth opportunities within the alt sectors just the insurance channel, and you've got a Canada Life within the ecosystem. Like could you give us a sense of where you are at with Sagard kind of leveraging that relationship to source capital from insurance? And I could broaden that out, I guess, to third-party insurance companies as well.

Yes. Thanks. Good question, Bart. Thank you. So the first thing to say is that what Canada Life and Great-West Lifeco does with its balance sheet is their own decision, of course. And so the primary decision making that goes on there is what's right for their portfolio. And when you look across the suite of assets that the alt managers have, there are some products that fit in. But when you're running an insurance balance sheet, equity is not exactly a capital-friendly thing to do. You have some room for it, and there is some private equity on the Canada Life and the Great-West Lifeco balance sheets that comes from Sagard and Power Sustainable, but the bulk of what they're looking for is credit. And then when you get into private credit, there's some allocation to that on the Canada Life, Great-West Lifeco balance sheets, but it's not -- it's a pretty small asset class. So you can address that more directly in questions to them. So I guess the answer is there's an opportunity, but it's not -- you're not going to drive the growth of Sagard or Power Sustainable based on that. Power Sustainable itself has an infrastructure credit fund in the United States with Tom Murray running it, which is a really high-quality product. That is something I know that the Canada Life folks are very excited about and interested in. So there's some spots here and there. So I think that Canada Life and Great-West Life have moved some of their portfolio into alts, but in typical Canada Life, Great-West Life fashion, they've not been as aggressive in that space as some of their competitors and certainly not the insurance companies that actually -- are actually owned by the alt managers where they've gone in a much more aggressive fashion. So the high-level answer is it's Great-West Life's decision, it's Canada Life's decision. There's some opportunity, but -- and Sagard and Power Sustainable are all over it. There's what we're talking to them all the time. But I don't think you grow the businesses on the back of that. So I think, operator, that's it for the questions? It looks like it is.

There are no further questions at this time.

Okay. Great. Thank you. So with that, I'd like to thank everyone for joining us this morning, and I hope you have a great day, and we'll talk to you at our upcoming quarterly Q1 report. Thanks, everybody.

Thank you all.

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