Generation and Caisse de Depot et Placement du Quebec had taken two-thirds of the wealth management services provider, from General Atlantic and HIG Capital.
The deal is the first investment to be made by a new partnership formed by Canada’s second-largest pension fund and the investment firm co-founded by former US vice-president Gore and former Goldman Sachs Group partner David Blood. The duo plans to deploy US$3 billion initially for investments with an eight-to-15-year duration.
FNZ was founded in New Zealand in 2003 by its chief executive, Adrian Durham, and others.
"We started FNZ by asking: how can technology solve the problems faced by consumers of long-term savings products? We saw investors being charged so much that their retirement income was halved by charges alone. They were no better off than a bank deposit, despite taking risk and investing in managed funds for over 30 years. Choice was non-existent and the entire value chain was managed using paper," Durham said.
"Our approach has entirely digitised the value chain, reducing cost and complexity for financial institutions and consumers alike. Our clients have all moved to Platform-as-a-Service (PaaS) combining cloud-based software with transaction and custody services. This frees them to focus purely on their customer proposition, transferring all the technology, transaction and asset servicing to FNZ.
"This unique PaaS approach, combined with regulatory change, has reduced total consumer costs in long term savings by around 40% over the last decade. It has transformed the accessibility, choice and transparency of a consumer’s long-term savings.
"We see a unique opportunity to create a global-scale platform for wealth management. This requires a willingness to invest for the long-term. The firm’s 400 employee shareholders are firmly committed to this outcome and CDPQ-Generation is the perfect partner, given its unique 8-15 year time horizon and focus on sustainable investments.”
Stephane Etroy, executive vice-president and head of private equity at CDPQ, said: “We have researched the best global financial services technology businesses with a focus on companies that have long term, truly global-scale potential. We are extremely excited to partner with FNZ management team to build a business over a time period which is not typical for either private equity or public equity businesses. Through our newly announced partnership with Generation, we are creating a new model of sustainable equity investing which reflects the ethos of both companies, and is ideally suited to the objectives of long-term sustainable value creation.”
David Blood, senior partner and co-founder at Generation, said: “FNZ represents an outstanding first investment for our new partnership. It is an exceptional company with a management team that has demonstrated its ability to innovate and grow in the fast-moving FinTech sector. We believe our long-term approach will suit the company and allow it to continue to invest in its technology and service proposition to the benefit of savers and pensioners, as well its employees, customers and investors”.
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