Power Financial, a notable investor in the FinTech space and a backer of companies like Borrowell, Clearbanc, Koho, and League, now owns an 88.6 percent stake in Toronto-based Wealthsimple.
Since its 2014 launch, Wealthsimple has expanded its client base to 100,000 across Canada, the United States, and the United Kingdom.
Power’s first quarter financial results for 2019, released earlier this week, point to two additional investments from Power and its subsidiary, IGM Financial, into the Toronto-based FinTech. During this year’s first quarter, Power Financial and IGM invested $12 million and $18 million in Wealthsimple, respectively. This new funding, in addition to its previous investments, brings Power’s cumulative investment in Wealthsimple to $238 million.
Since its 2014 launch, Wealthsimple has expanded its client base to 100,000 across Canada, the United States, and the United Kingdom, and reported over $4.3 billion in assets under administration (AUA) as of March 31. During the company’s last quarter, its AUA sat at $3.4 billion, indicating a 26.4 percent quarter-over-quarter growth.
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The company currently receives the majority of Power’s investment through IGM, which has $160.7 billion in total assets under management. According to the first quarter report, Portag3 Ventures holds a 23.7 percent equity stake in Wealthsimple, Power Financial directly holds a 17.4 percent stake, and IGM holds a 47.5 percent stake, for a total of 88.6, representing a combined voting interest of 88.9 percent. That equity stake percentage, however, does not include other types of company ownership or unconverted shares, such as convertible bonds, warrants, and employee stock options.
Power contributed $30 million to the company in 2015, with an initial investment of $10 million being made in April 2015 and an additional $20 million, which Power added later that year, according to the Globe and Mail. Wealthsimple received a second investment of $20 million in December 2016, and announced Paul Desmarais III, senior vice-president of Power Financial, would join as chairman of Wealthsimple. Power then participated in a $50 million round in May 2017, as well as a $65 million round from in February 2018.
The company has recently been diversifying, adding a host of new offerings to its suite of products and services. Wealthsimple’s mutual-fund investment firm with its own financial advisors was first announced in January, entitled Wealthsimple for Advisors. Wealthsimple Trade was first announced last August, when the company stated, at the time, that more than 8,000 publicly-traded stocks and ETFs listed in Canadian and US exchanges would be available on the app and users could start trading at $1. The company has also announced other new offerings, including Wealthsimple Save, Wealthsimple Invest, and Wealthsimple for Work.
The company also announced a solution as part of a partnership with TurboTax, aimed to help Canadians save for retirement and open RRSPs. The company made a US expansion in February 2017, followed by a UK expansion in June of that same year.
Update (05/16/19): This article has been updated to include more context regarding Power’s ownership stake in Wealthsimple.
Image courtesy TSX.