Founder and CEO Michael Katchen has worked on building capacity – including treasury, check, insurance and mortgage products – to be added to the trading and automated investing platforms of the society. The goal is to become the leading user financial institution and grow the user base to 15 million from its current 2 million over the next five years, making it the largest consumer finance company in the world. Canada.
With Wealthsimple and Power Corp. Raising $ 750 million in a funding round announced Monday, the company has the means to strike deals that could accelerate that growth. Katchen credits Wealthsimple’s acquisition of ShareOwner Investments Inc., announced in 2015, for transforming the business by providing the back office infrastructure it needed to become a large-scale investment platform .
“We’re interested in infrastructure like that – infrastructure companies across the spectrum of financial services – and then products that interest us as part of the ecosystem,” Katchen said in an interview. He cited Wealthsimple’s buyout of SimpleTax in 2019 as an example of the type of product acquisition he would be interested in.
The latest round of funding consisted of a $ 250 million primary offer by Wealthsimple and a $ 500 million secondary offer by Power Corp. and its subsidiaries. Power Corp., the Canadian financial conglomerate controlled by the Desmarais family, will own 43% of Wealthsimple after the financing, including the units held by IGM Financial controlled by Power Inc. and Great-West Lifeco Inc.
The funding announcement confirmed a Bloomberg report on April 30 that the company was in talks to raise funds worth at least $ 4.3 billion. Wealthsimple raised $ 114 million at a post-monetary valuation of $ 1.5 billion in October, giving it unicorn status.
The round was led by existing investors Meritech Capital Partners and Greylock Partners, the Toronto-based firm said on Monday. Also participating are Canadian celebrities, including rapper Drake, actors Ryan Reynolds and Michael J. Fox and basketball player Kelly Olynyk.
News of the new round of funding also pushed up shares of Power Corp. and its subsidiaries. Power Corp. Toronto rose 1.5% to $ 36.34 on Monday, while IGM rose 2.2% to $ 44.86 and Great-West Life added 0.3% to $ 35.73.
Wealthsimple is benefiting from rising valuations of tech companies and an increase in online trading that has fueled rivals such as Robinhood Markets Inc., which in March said it had confidentially filed an initial public offering. Katchen acknowledged that the market is ready for IPOs of companies like his, and said Wealthsimple “could go public today,” but wants more time before taking that step.
“In a market like this, where IPOs are so well received, I think people are rushing to go public, and that can create all kinds of bad consequences where you put new pressure on profits to be. short term, ”Katchen said. “We’re building a business for the very long term, and we want a little more time to make sure we’re making those investments before we introduce those kinds of pressures to build the business the right way.”