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Italian-based financial software provider Objectway Group is expanding its North American footprint with the purchase of digital wealth manager Nest Wealth Holdings Inc., one of Canada’s first financial technology companies that initially launched as a robo-adviser business nearly a decade ago.

On Monday morning, the two companies jointly announced Objectway has acquired 100 per cent of Nest Wealth, including the minority shares held by Canada’s sixth-largest bank, National Bank of Canada. The deal includes Nest Wealth Asset Management Inc. and Nest Wealth Solutions Inc.

In 2017, National Bank – through its venture capital arm, NAventures – made an initial $6-million investment in Nest Wealth. Then, in 2020, the bank expanded its existing commercial agreement with Nest Wealth with an additional minority investment of up to $50-million in the digital company.

The financial details of the Objectway transaction – including National Bank’s return on investment – were not disclosed.

However, Nest Wealth founder and chief executive officer Randy Cass said it was an “attractive deal for all shareholders.”

“We don’t disclose details on private deals, but our transaction was contrary to the kind of market conditions that have existed over the last couple of years in the technology sector, and was at a higher valuation than when we have raised money in the past,” Mr. Cass said in an interview with The Globe and Mail.

Mr. Cass and all 80 of Nest Wealth’s employees will remain with the company and Mr. Cass says there are “no immediate plans” to alter the Nest Wealth brand.

“Objectway has an incredible presence globally so we will continue to look at what benefits that brand might have by bringing it into North America,” he added.

While currently not well-known within the Canadian market, Objectway provides software services to more than 200 banks as well as wealth and asset managers globally, including in Italy, Britain, Germany, Switzerland and the United Arab of Emirates.

Objectway founder and chief executive Luigi Marciano said in a statement the acquisition is a “significant milestone” in the company’s growth and global expansion strategy to “broaden” its market presence in North America.

As well, Mr. Marciano said the deal will allow Objectway to expand its services by offering Nest Wealth’s products to its existing and new customers in Europe, the Middle East and Africa.

Nest Wealth first opened its doors in Canada in 2014 as a robo-adviser – a term used to define an online portfolio manager that allows investors to access a quick risk-assessment tool that calculates an appropriate asset allocation based on age, financial goals and risk tolerance.

Clients are then able to easily transfer money into a recommended investment portfolio predominantly made up of exchange-traded funds – all for much lower fees than usually offered by investment advisers.

Despite tough times, it’s been a good year for those who use robo-advisers

Nest Wealth was one of only a handful of online wealth managers that first entered Canada nearly a decade ago, including major competitors Wealthsimple and WealthBar (which was acquired by CI Financial in 2018). Within five years of Nest Wealth’s launch, more than 15 robo-advisers had popped up, all offering Canadians easier access to direct investing.

In order to remain competitive, many robo-advisers began to partner with traditional wealth management companies or pivot into other areas of the business.

In 2017, around the same time National Bank first invested in the company, Nest Wealth launched a new business-to-business platform – Nest Wealth Pro. The new segment allowed financial advisers to access Nest Wealth’s portfolio-management tools for a discounted price.

Two years later, Nest Wealth boosted its financial adviser capabilities with the purchase of Alberta-based Razor Logic Systems, the developer of financial-planning software RazorPlan – a tool that links a financial plan directly to a client’s investment portfolio and monitors its progress online.

Today, while it continues to offer a direct-to-investor product, Nest Wealth has largely increased its business by servicing some of the largest financial institutions, custodians and asset managers in Canada, including half of Canada’s Big Six banks. (Nest Wealth declined to disclose the names on its client roster.)

According to the company’s website, Nest Wealth Pro’s clients include National Bank of Canada, independent wealth manager Raymond James, Manulife Securities and insurance giant HUB Financial.

“The technology that’s offered to financial service firms in Canada has not really kept up with what’s available globally,” Mr. Cass said. “Objectway brings an entire suite of advanced financial solutions that are tried and tested, that are used by hundreds of financial institutions globally. It now opens the doors for our financial institutions to have access to those same tools and outcomes. It really does elevate the entire fintech ecosystem in Canada.”

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