Power Financial Corp.’s online investment manager Wealthsimple has raised $100-million in one of the country’s largest investment rounds for a fintech company.
Wealthsimple announced Wednesday that its latest round of funding was led by Allianz X, the digital investment arm of Germany-based Allianz Group, a global insurer and investment company that manages almost €2-trillion in assets.
Toronto-based Wealthsimple did not disclose the exact amounts offered by each of its investors in the $100-million deal. However, it confirmed that Allianz X will obtain just under 10 per cent ownership in the company. In recent disclosures, Power Financial contributed at least $30-million to the fundraising round. Together with its subsidiaries Portag3 and IGM, Power Financial holds a combined voting interest in Wealthsimple of 88.9 per cent.
This latest financing for Wealthsimple comes at a time when roboadvisers are starting to pick up momentum in Canada’s wealth-management industry, recently surpassing $5-billion in assets under management. As more investors look for lower-cost advice and online investing solutions, Wealthsimple has set an aggressive goal of achieving $1-trillion in assets under management within 15 years.
Wealthsimple will use the additional capital to develop new products while evolving its B2B platform for advisers and financial institutions, CEO Michael Katchen said in an interview. Currently, Wealthsimple runs an investment management service, a securities trading platform and savings accounts for clients.
This is Wealthsimple’s fifth round of financing since announcing a strategic partnership with Power Financial in 2015. The first four rounds were provided solely from Power Financial – which had invested $238-million in Wealthsimple, as of March 31, 2019.
Wealthsimple manages over $4.5-billion in assets for more than 150,000 clients in Canada, the United States and Britain. The addition of a large global investment partner was central to Mr. Katchen’s future plans of taking the company public. In looking for a new partner that would complement Power, Mr. Katchen travelled to meet prospective investors in Europe, the U.S. and Asia.
“It is exciting for us to continue to have the strong backing from Power, as well as bring in a new partner alongside them,” Mr. Katchen said. “But if we were just a Power-backed company forever, then that would be a really hard story to tell. Now, with this first major endorsement of a third party investing meaningful capital into our business, it brings forth the story line we want to prove towards an IPO.”
This is the first Canadian investment for Allianz X, which invests in innovative digital companies around the world. Its portfolio includes U.S. insurtech Lemonade, micro-insurer BIMA and ride-hailing companies GO-JEK & SafeBoda.
Philip Wieland, investment manager with Allianz X, says its investment in Wealthsimple is complementary to the company’s digital portfolio, which also includes an investment in a roboadviser platform in the U.K. “This is one of the largest investments we have done and we look forward to building a long-term relationship with the team at Wealthsimple,” he said in an telephone interview from Germany.
As part of the financing, a member of Allianz X will be joining the Wealthsimple board.