Wellington-founded investment technology firm, FNZ, has seen its value rise almost 10-times in a little over three years following a landmark equity raise last week.
Canada Pension Plan Investment Board (CPP), one of the world’s largest institutional investors, and US fintech specialist private equity firm, Motive Partners, tipped in a collective US$1.4 billion to FNZ in a deal that values the global platform player at more than US$20 billion. CPP contributed US$1.1 billion to the capital-raise, according to a FNZ release.
In October 2018, another Canadian pension fund – Caisse de Depot et Placement du Quebec – and the Al Gore-founded Generation Investment Management private equity business together paid about NZ$2.3 billion for a two-thirds slice of FNZ, pricing the company then at NZ$3.45 billion (or US$2.3 billion at current exchange rates).
Singapore sovereign wealth fund, Temasek, also took a stake in FNZ in 2020 with Boston-based private equity player, Summit Partners, picking up a minority shareholding this year.
FNZ executives and staff continue to own about a third of the fast-growing company that now boasts over 4,000 employees, more than doubling the global workforce in less than three years.
“All investors remain long-term and committed shareholders, alongside more than 800 employee-shareholders. No investors will be selling any secondary shares in the transaction,” the release says.
The now London-headquartered FNZ (previously it listed Edinburgh as home base) reported assets under administration of US$1.5 trillion, up seven-times compared to five years ago.
Until relatively recently, FNZ relied primarily on organic growth but the firm has been on an aggressive acquisition trail over the last few years.
During the last three months of 2021, for example, FNZ purchased the Swiss financial services digital solutions firm, Appway; the German trading and custody platform, Fondsdepot Bank, as well as Wellington-based US stock-trading service, Hatch from Kiwi Wealth.
In December the group also completed a deal to buy the capital markets arm of Australian investment software business, GBST, ending a complex – and expensive – two-year legal wrangle with UK competition regulators.
“The capital raise will help FNZ further accelerate its growth through increased R&D, as well as driving growth in markets that FNZ have recently entered, in particular North America,” the statement says.
Adrian Durham, FNZ founder and chief, said in the release that the latest capital injection “represents a resounding endorsement of FNZ’s track record and future strategy”.
“The company has successfully demonstrated exponential growth in the scale and depth of customer relationships and geographic expansion with platform revenues more than quadrupling in the past three years to over US$1billion per annum, whilst also growing profitably and sustainably,” Durham said.
“Our growth trajectory shows no signs of slowing down, and we are delighted to welcome CPP Investments and Motive Partners to FNZ and look forward to working with them as we further invest in and enhance our core platform, delivering substantial incremental benefits to our customers and their clients.”
Established in Wellington in 2003 under the aegis of broking firm First NZ Capital (now known as Jarden), FNZ first expanded to the UK in a 2005 contract with Edinburgh-headquartered Standard Life, parlaying the deal into further European expansion.
As well as continuing to build platform scale in its country of origin to $22 billion at the latest count, FNZ also established operations in Asia prior to the more recent US move.
And while the group has long had a foothold in Australia, the country proved resistant to FNZ technological charms at first.
Earlier this February, however, FNZ cemented a major breakthrough in Australia, striking an agreement with Colonial First State (CFS) – the superannuation and platform business owned by majority partner, KKR, and the Commonwealth Bank of Australia – to reboot the group’s wrap technology.
“The launch of the new wrap platform marks the next stage of the $430 million investment CFS is making across the business over the next four years,” a joint statement says. “The replacement of technology underpinning the current wrap platform will increase CFS’s competitiveness and is expected to drive significant growth in coming years.”
CFS has about A$135 billion in funds under administration (FUA). Prior to the CFS deal, FNZ reported A$70 billion of FUA in Australia.
The Canada Pension Plan manages more than C$540 billion. Launched in 2017 by finance and technology industry veterans, Motive has since invested in 13 companies in the sector. Last year US private equity giant, Apollo Global Management, took an almost 25 per cent stake in Motive.
The FNZ capital-raise follows a flurry of deals in the investment administration sector including the buy-out of Auckland firm, MMC, by the Bermuda-headquartered Apex last December. Apex also bought the Australian fund admin business, Mainstream, in November for A$410 million.