M and A

Wealthtechs Agree Strategic Merger, Expand Global Reach

Tom Burroughes, Group Editor, February 2, 2021

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Finantix and Tegra118 are being melded with InvestCloud to build a Software-as-a-Service wealth solutions platform. The change comes as InvestCloud completes a $1.0 billion recapitalization and extends its reach into continental Europe and Asia. The move has important implications for the wealth management market.

Los Angeles-based fintech InvestCloud – a business operating in the wealth management space - has completed a recapitalization that values it at $1 billion, merging with data provider Finantix and Tegra118, a wealthtech firm.

New financial investors are led by Motive Partners with Clearlake Capital Group, LP, as well as InvestCloud client shareholders. Other investors include Citi Ventures and Fiserv. 

As part of the agreement, Motive Partners will also put Finantix and Tegra118 – two of its portfolio firms – into InvestCloud to build a Software-as-a-Service wealth solutions platform, InvestCloud said in a statement today. InvestCloud will have more than $4 trillion of assets on its platform and revenues of over $285 million, with a team of over 900 people. Its footprint is “truly global” – adding locations and talent in continental European and Asian markets.

Four market opportunities
InvestCloud will organize its business through “distinct market opportunities”:

-- Wealth Advisor PlatformTM – with over $2 trillion AuM already, the InvestCloud platform will continue to build upon its business in North America, the UK, continental Europe and Asia; 
-- Private Banking PlatformTM – using the Finantix product as its core, InvestCloud will offer an international private banking platform using its technology; 
-- Financial SupermarketTM – using the Tegra118 product (already $2 trillion AuM), and its network of existing distribution relationships with asset managers, broker-dealers and custodians;
-- InvestCloud will continue to build an international financial supermarket to connect manufacturers (asset managers) to distributors (wealth managers); and 
-- Custom Financial Platform – using the hyper-modular cloud platform, clients can design and build unique Intellectual Property (IP) using InvestCloud’s design-first methods and AI PWP (Programs Writing Programs)TM to create cloud solutions.

Family Wealth Report is contacting the firms for more detail on strategy, and will update in due course.

Team 
John Wise is chief executive of InvestCloud, and Rob Heyvaert (founder and managing partner, Motive Partners) is chairman. Cheryl Nash of Tegra118 will become the CEO of the Financial Supermarket division and Christine Mar Ciriani of Finantix will become the CEO of the Private Banking division. Both will join the global InvestCloud management team reporting to Wise.

“The recapitalization achieves our first objective,” said Wise. “At a valuation of $1 billion, we can reward early investors in the business, while injecting new capital to fuel the next stage of our growth, further supporting our clients' needs.”

“Tegra118 has the largest integrated platform in the US, with fund sponsors (asset managers: nine of the top 12 in the US) connecting to distributors (wealth managers: seven of the top 10 broker dealers in the US) for financial products. Combining this with the digital platform of InvestCloud provides the best-in-class digital advice to advisor networks and advisors. With our existing clients, InvestCloud will now build a worldwide financial supermarket using Tegra118 as the base. Finantix adds further strength in Europe and Asia – particularly in the private banking space – to fulfill our ambition to distribute the InvestCloud platform and our collective solutions globally,” he added.

“Huge forces are impacting the wealth sector,” said Rob Heyvaert, founder and managing partner, Motive Partners and chairman of InvestCloud. “Whether it is demographics, democratization or disintermediation, the sector will change massively in years ahead. We believe the use of InvestCloud’s cloud technology and platform with our existing assets (Tegra118 and Finantix) will determine the winners. This investment, and the commitment of two of our existing businesses and their exceptional talent, creates a global wealth platform provider that has proven technology with the ability to scale and serve the needs of our global clients and their customers through existing, new and hyper-personalized solutions.”

Busy times
The development comes at a busy M&A period in the technology firms serving institutions serving wealth managers, banks and other financial players. As reported here by FWR's sister news service, the London Stock Exchange Group’s purchase of data provider Refinitiv from Thomson Reuters and a group of private equity funds has been completed – a deal valued at about $27 billion. 

Firms such as SS&C Technologies and Avaloq, to name just two, are driving hard to win markets and become the go-to organizations that wealth managers will want to use. It is still a crowded field but some consolidation is under way. Last year, Japan-based NEC bought Avaloq from US-based private equity house Warburg Pincus.

In the summer of 2019 fintech specialist FNZ Group bought wealth management technology provider JHC. (FNZ offers outsourced services such as those allied to the digital user experience, client, account and portfolio management and back-office trade execution, settlement and investment administration. JHC is known for services such as its Figaro wealth platform for account administration, trading, reg. compliance, and Neon, a dashboard to monitor portfolios, analyze risk and check suitability.) In 2018 FNZ also agreed to acquire German investment platform ebase from Commerzbank, showing the importance of Europe’s largest economy to its thinking about business strategy.

To some extent the M&A moves in wealthtech mirror the mergers being seen in the RIA sector, for example.

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