FNZ has hooked-up with Microsoft to fast-forward its artificial intelligence (AI) ambitions just as a shareholder legal challenge came to a head last month.
Under the five-year ‘partnership’ deal revealed last week, FNZ will plug into the Microsoft cloud-based Azure AI Foundry to “bring new solutions to market faster, enhance client outcomes, boost advisor productivity and drive innovation across industry”, according to a release.
The joint project will see FNZ use Microsoft AI and software engineering nous across the board from adviser tools through to back-office processes.
And the NZ-headquartered investment platform business also plans to work with the US tech giant to build “modular wealth solutions” to be distributed via “multiple channels, including the Microsoft Marketplace”.
Roman Regelman, FNZ group president, said in a release: “Partnering with Microsoft allows us to accelerate our AI-led roadmap and enhances our ability to deliver personalized, intelligent and resilient solutions to our clients, strengthening our position of leadership.”
The Microsoft news brings a welcome distraction, too, for the platform provider as it stares down a $7.7 billion lawsuit lodged by a group of staff-shareholders in the NZ High Court late last month.
Under the long-awaited legal action, certain FNZ B-class shareholders – represented by an anonymous Cayman Islands-based entity, Kiwi CayLP – allege a series of institutional capital-raises over the last year or so unfairly diluted the staff stock.
Kiwi CayLP, represented by law firm Meredith Connell, claim the capital injections “had the effect of immediately transferring over USD$1.5 billion in value from employees to the institutional and private equity investors involved, over and above any capital raised”.
“Furthermore, the transactions will have the effect that on exit, employee shareholders’ equity would be diluted to zero if FNZ was to be valued in a sale or IPO at less than USD$8.3 billion,” according to a statement.
The suit, aimed at FNZ and 17 current or former directors, is seeking US$4.6 billion (NZ$7.7 billion) of redress on behalf of the B-class shareholders that owned almost a quarter of the company’s total equity.
“FNZ notes the claim filed in New Zealand and considers it to be entirely without merit,” a spokesperson for the group said. “We are confident that our directors have at all times acted in the best interests of the company, its clients, employees and all stakeholders.”
Institutional owners – including Caisse de dépôt et placement du Québec (which holds about 41 per cent of FNZ), the Canada Pension Plan, the Al Gore-founded Generation Investment Management and Motive Partners – declined to comment.
The institutions collectively tipped in about US$1.5 billion over 2024 and 2025 in equity and debt deals to shore-up the loss-making enterprise. FNZ reported a total loss of more than US$900 million last year following a US$560 million plus shortfall in 2023.
The company had been on a multi-year shopping expedition to bolster its global coverage including a foray into the US.
Earlier this year rating agencies Fitch and S&P both downgraded FNZ debt, noting the company’s high cash-burn rates and slower-than-expected growth.
FNZ has almost US$2 trillion in assets under administration on behalf of more than 650 financial institutions and 28 million end investors.
Founder Adrian Durham stepped down last year as FNZ chief in favour of Motive Partners principal, Blythe Masters. Last week Durham was named as chair of UK biotech firm, Barney.