Wealthsimple has raised up to $425 million at a $13.8-billion valuation, up from $10 billion a year ago, BetaKit and The Logic report. That’s a 38% jump in a year, and it makes the Toronto company one of the most valuable private tech firms in Canada.
The deal
- Lead investor: GIC, Singapore’s sovereign wealth fund.
- Also in: Power Corporation of Canada and its subsidiary IGM Financial, U.S. firm Iconiq, CPP Investments and Montreal’s Inovia Capital. All were existing backers. CEO Michael Katchen told The Logic there was so much demand from current shareholders “that it didn’t make sense to bring anybody new in at this time.”
- New money: $300 million goes to the company, for its product roadmap and technology, and to meet regulatory capital requirements, per The Logic.
- Cash for staff: up to $125 million is a secondary sale, with investors buying shares from employees and existing shareholders.
The numbers Wealthsimple shared
| A year ago | Now | |
|---|---|---|
| Valuation | $10 billion | $13.8 billion |
| Assets under administration | about $100 billion | more than $169 billion |
| Canadian clients | 3 million | more than 4 million |
Wealthsimple also says it has 30,000 business clients, has launched more than 50 products, and is profitable, according to BetaKit. Its stated goal is $1 trillion in assets by 2034.
Katchen told The Logic none of the new money is going to marketing, because the company now leans on cash bonuses and promotions to win clients. He also said he believes Ottawa is close to implementing its promised ban on the fees investment firms charge to transfer accounts out, which he says average $150.
The competition
Wealthsimple isn’t the only one raising. Koho raised $130 million at a $1.33-billion valuation in June, and EQ Bank is absorbing PC Financial, which it bought from Loblaw for $800 million, The Logic notes.
Why it matters: For Wealthsimple’s 4 million clients, nothing changes today. But a well-funded, profitable challenger with regulatory capital to spare puts more pressure on the big banks on fees and features. If the transfer-fee ban arrives, moving your accounts gets cheaper too.