Motive, CPP Investments in USD 1.4bn equity raise for FNZ

Wahida Ahmed
11 February 2022

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US-based private equity firm Motive Partners and the Canada Pension Plan Investment Board have committed USD 1.4bn new capital to London-based fintech firm FNZ.

Following the primary capital raise, FNZ is valued at over USD 20bn.

The fresh funds will accelerate the company's international expansion plans, in particular, enabling it to enter into the North American market, noted a statement.

Lazard acted as exclusive financial adviser to FNZ on the raise.

CPP Investments deployed a total of USD 1.1bn, according to a statement. CPP and Motive declined to disclose stake sizes.

Unquote's sister publication Mergermarket reported in December 2021 that the wealth management company was working with Lazard on a capital raise and could welcome new large-cap investors. At the time, pension and sovereign funds, as well as private equity firms, were eyeing the business.

Earlier this year, Mergermarket reported that FNZ attracted interest from international investors ahead of its second-round bid deadline. According to the report, Hellman & Friedman, CPP Investments and KKR had made it to the second round while Silver Lake Partners was among those interested in the company.

Mergermarket reported that FNZ sold its GBST unit to Anchorage Capital Partners in December 2021 to meet the demands set by competition regulators but it intends to reacquire the asset's capital markets division. FNZ acquired Hatch, a New Zealand-based online investment platform, from Kiwi Wealth in October 2021 to expand its product offerings, according to reports at the time.

Speaking to Unquote, Robert Brown, partner at Motive, said: "We have been working with CPP through the years and evaluating opportunities in the financial tech space. This opportunity came about through our collaboration with CPP and this is the first actionable project we have engaged in together."

Brown confirmed the firm deployed equity through Motive Capital Fund II. The vehicle was registered in June 2020, according to Unquote Data. It is expected to have a target size of around USD 1bn to USD 1.5bn, and will adopt the same strategy as its predecessor, Motive Capital Fund I. The GP typically invests in tech companies operating in the financial services sector. According to its website, current portfolio companies include US-based CAIS, an open marketplace for alternative investments; New York-based Trumind, a financial technology firm; and, Wilshire, an international financial services firm.

Commenting on deal pipeline, Brown said: "It is quite robust, a number of different things are driving that including the circular economy trend which has accelerated over the last few years. The companies we invest in, the end-users have an insatiable appetite for tech products, as we move forward we don't see abating in any way."

He added why Motive chose to invest in FNZ: "This company is clearly a crown jewel of the industry, the company has been very successful in offering its product geographically and because of its success we have great conviction. Our collective ability with CPP will take FNZ forward."

CPP Investments is headquartered in Toronto and is governed and managed independently of the Canada Pension Plan and at arm's length from governments, according to a statement. As of December 31, 2021, the LP's funds amounted to USD 550.4bn, according to its website. It in an array of sectors including consumer services, financial services, technology, healthcare, industrials, telecommunications and utilities, according to Unquote Data.

FNZ did not responded to requests for comment at the time of publication.

Previous funding
FNZ drew investments interest from several international investors. CPP and Motive are the fifth and sixth external shareholders in the company.

FNZ was acquired by HIG Capital in January 2009 in an MBO for an undisclosed sum and in February 2012 it sold a minority stake to General Atlantic.

In 2018, Caisse de dépôt et placement du Québec and Generation Investment Management bought FNZ from HIG Capital and General Atlantic at a valuation of GBP1.65bn, as reported by Mergermarket. According to reports at the time, HIG and General Atlantic each owned 33% of FNZ.

In 2020, the company secured investment from Singapore-based Temasek, to accelerate growth in the Asian markets.

According to the company's website, current investors also include Summit Partners and more than 800 employees of the business, which hold around 30% of the company.

In a statement, the company said no investors will be selling any secondary shares in the transaction and that they remain long-term and committed to the business.

Company
FNZ was established in 2003 in New Zealand and is headquarted in London. The fintech firm provides a platform harnessing technology, investment operations and insfrasture to provide a personalised and seamless service to its clients. According to a statement, in the last five years, it has grown assets under administration over seven-fold from USD 212 billion to over USD 1.5 trillion and has enabled over 20 million users, from various wealth sectors to invest.

The company's goal is to make wealth management accessible to everyone. It has over 4,000 employees across 21 countries and works with over 650 financial institutions including Allianz and Barclays.

People
FNZ – Rob Heyvaert (founder, manager partner).
CPP – Hafiz Lalani (managing director, head of Europe).
Motive Partners – Robert Brown (founding partner); Sam Tidswell-Norrish (principal).

Advisers
Vendor – Lazard (financial due diligence); Allen & Overy (legal).
Equity (CPP Investment Board) - Morgan Stanley (finacial due dilligence); Kirkland & Ellis (legal).