Montréal-based online mortgage lender Nesto has acquired Vancouver-based CMLS Group, the third-largest mortgage finance company in Canada, for an undisclosed amount.
All CMLS executives and employees will join the combined company, which will be headed by Nesto CEO Malik Yacoubi.
The deal makes the FinTech startup into one of the largest mortgage lenders in the country. Nesto says the combined entity will have over 1,000 employees across 10 offices and more than $60 billion in mortgages under administration.
While financial details of the transaction were not disclosed, Nesto said the transaction was supported by investments from Diagram Ventures, Portage, National Bank of Canada’s venture capital arm NAventures, IGM Financial, BMO Capital Partners, Fonds de solidarité FTQ, and Fondaction.
Nesto, CMLS, and CMLS’s subsidiary Intellifi will remain as separate brands as the companies continue to serve all of their partners and clients. CMLS shareholders will also have an equity stake in the combined entity.
Additionally, all CMLS executives and employees will join the combined company, which will be headed by Nesto CEO Malik Yacoubi, while CMLS CEO Sam Brown will continue as the company’s president and head of its commercial division.
“In addition to the strong business rationale for the transaction, we were very impressed by the strong entrepreneurial values at CMLS and how engaged employees are,” Yacoubi said in a statement. “There is a clear culture fit for our organizations.”
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CMLS was established in 1974 and provides advisory and asset-management services in addition to its commercial, institutional, and residential lending services across Canada.
Nesto was founded as a digital direct-to-consumer mortgage lender in 2018 by Yacoubi, principal broker Chase Belair, CTO Karim Benabdallah, and COO Damien Charbonneau. The startup notably raised an $80-million CAD Series C round in December 2022, as it launched its Nesto Mortgage Cloud offering, which provided its mortgage platform to financial institutions.
Earlier this year, Nesto entered a partnership with M3 Mortgage Group that saw its platform become available to the over 8,500 brokers in M3’s network. The partnership followed Nesto taking over the mortgages portfolio of insurance company Canada Life as it exited the residential mortgage space in December 2023.
Nesto also earned seventh place on Deloitte’s Fast 50 list in November 2023, with a three-year revenue growth rate of 2,186 percent.
Feature image courtesy Nesto via its website.