Zafin, the Toronto company that sells AI and pricing software to banks, has signed a definitive agreement to buy Naehas, a Palo Alto, Calif. company whose software helps banks build marketing offers and the legal disclosures that go with them. Neither company disclosed the price. The Globe and Mail puts it at a nine-figure sum in U.S. dollars, paid in cash (partly from a credit line) and equity.

The deal is expected to close in the fourth quarter, pending regulatory approvals. Until then, the two companies run separately.

What Zafin gets

Naehas has about 250 employees and $30 million to $50 million USD (about $42 million to $70 million CAD) in annual revenue, the Globe reports. CEO Charbel Safadi told the paper the deal adds “a fourth pillar” to Zafin’s strategy, and that once it closes, Zafin will count 16 of the top 20 U.S. banks as customers.

Zafin’s software sits on top of banks’ older core systems and handles things like product pricing and personalized offers. Its newer product, AIOS, coordinates and logs the work of AI agents so banks can show regulators how decisions were made. Clients include CIBC, HSBC, Barclays and ING.

The numbers, per the Globe

  • Founded in 2002, now more than 1,000 employees
  • Stockholm’s Nordic Capital took majority control in early 2024, at a valuation above $500 million USD (about $700 million CAD)
  • Sales have more than doubled since the Nordic deal, and it’s on track for $200 million USD (about $280 million CAD) in annual recurring revenue by year-end
  • Growing 30% to 40% a year, with operating margins above 20%
  • More than half of revenue from the U.S., less than 10% from Canada

Safadi said Zafin could make one to three more acquisitions in the next year, but none of that size.

Why it matters: Zafin isn’t a household name, but it’s a Toronto software company with more than 1,000 staff, growing mostly by selling to U.S. banks. Under private equity ownership, it’s now the buyer rather than the one being bought.