German-based Allianz X has claimed a minority stake in investment industry veteran Som Seif’s Purpose Financial LP with a $53-million investment.
In the deal, which is to be announced Wednesday morning, Allianz X will make its second major investment in Canada, taking a 10-per-cent ownership stake in financial services provider Purpose Financial. Allianz X is the digital investment arm of global insurer Allianz Group, which manages almost €2-trillion ($3.08-trillion) in assets.
Mr. Seif, who is chief executive officer of Purpose, said the capital will help accelerate growth within the company – particularly in its retirement planning and in small-business lending operations.
“One of the biggest challenges we have as an industry in both Canada and in developed countries around the world is there is an aging demographic, and income security for that demographic is a huge social issue we have to be more focused on,” Mr. Seif said in an interview. “We are going to aggressively focus on building out better retirement offerings for Canadians.”
Over the past several years, Mr. Seif has been expanding his asset management business into a more digitally enabled financial services company. He continues to run Purpose Investments – an exchange-traded funds company that manages about $10-billion in assets. In 2018, he acquired online small-business lender Thinking Capital Financial Corp. and launched a cryptocurrency company, Ethereum Capital Inc.
In addition, he has added Purpose Advisor Solutions, which is a technology platform that manages about $2-billion in assets for independent wealth advisers and portfolio managers.
Allianz X is similarly known for tapping into innovative companies, with investments in names such as U.S. insurer Lemonade, telemedicine provider Amwell, Germany-based challenger bank N26 and ride-hailing companies Gojek and SafeBoda.
This is the second Canadian corporate investment for Allianz X. In 2019, Allianz X led a $100-million round of funding for Power Corp.’s subsidiary Wealthsimple. The global insurer contributed about $50-million to the round and obtained just less than 10-per-cent ownership in Wealthsimple and a seat on Wealthsimple’s board of directors.
Similar to the Wealthsimple deal, a member of the Allianz X team will be joining the Purpose Financial board of directors.
Mr. Seif said he has been in discussions with Allianz for more than a year, prior to the COVID-19 pandemic during a time Allianz was looking to expand its relationships in the Canadian market.
Mr. Seif said both companies will be able to leverage one another’s expertise in the insurance and wealth management space, particularly in retirement planning.
Allianz’s global head of retirement and wealth, Cameron Jovanovic, said retirement is also part of his company’s growth strategy, and a partnership will allow it to build more “digitally-enabled solutions” for customers.
“Given the current macroeconomic challenges and the growing importance of providing joint life insurance and asset management solutions, this partnership is a significant opportunity for Allianz and Purpose Financial to leverage each other’s expertise in financial services and digital technology,” Mr. Jovanovic said in a statement.
Mr. Seif is widely known in the financial community as Canada’s ETF pioneer after introducing some of Canada’s first ETFs to the market with the launch of Claymore Investments in 2005. That company quickly took off, reaching $8-billion in assets under management in fewer than six years.
In 2012, when ETFs began to catch the eye of larger asset managers, Mr. Seif’s U.S. financial backer, Guggenheim Partners, decided to sell the company to competitor BlackRock Inc.
A year later, Mr. Seif re-entered the ETF space with the launch of Purpose Investments . In 2017, he took on his first financial partner when OMERS Platform Investments, a branch of one of Canada’s largest pension fund managers, invested an undisclosed amount.
OMERS continues to be the largest institutional shareholder, while Allianz X will be the second largest.