Canada’s Wealthsimple Raises Funds at $9.8 Billion Valuation

(Bloomberg) -- Wealthsimple Financial Corp. was valued at C$13.8 billion ($9.8 billion) after the Toronto-based fintech agreed to raise as much as C$425 million in an equity round, it said in a Tuesday statement.

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That means the company, which offers an investing platform as well as banking products, is worth 38% more than a year ago, cementing its position as one of Canada's most valuable startups.

The capital raise announced Tuesday was led by Singapore's sovereign wealth fund GIC. Montreal-based Power Corporation of Canada invested C$68 million, and its subsidiary IGM Financial Inc. invested a further C$96 million. Power Corp.'s direct equity interest in Wealthsimple is valued at C$2.1 billion including the new money being invested, that company said in a statement.

Iconiq, Canada Pension Plan Investment Board and Inovia also participated in the capital injection, which included both a C$300 million primary offering as well as a secondary offering of up to C$125 million which allowed employees to realize gains.

Wealthsimple plans to use the proceeds to expand its product offering, which includes credit cards, checking accounts and business banking products, as well as trading and investing services.

"This is really about stepping on the gas," Co-Founder and Chief Executive Officer Michael Katchen said in an interview.

"We've brought so many new products to market to serve our clients, to help them leave the banks," he added, that now "their entire financial lives are on Wealthsimple."

The Canadian startup now has C$169.2 billion in assets under administration, after Katchen blew past a previous goal to amass C$100 billion by 2028. The next goal is C$1 trillion, he told Bloomberg last week.

Wealthsimple grew its assets under administration by 70% over the past year, with its speed and agility continuing to take many by surprise, according to Bank of Nova Scotia analyst Phil Hardie.

"The transaction marks another positive step and highlights the overlooked value creation potential of IGM's strategic investments and the proprietary investments that make up the bulk of Power Corp.'s 'private stub'," Hardie wrote in a Wednesday note.

At Desjardins Securities, analyst Doug Young said IGM Financial's stake in Wealthsimple is now valued at C$3 billion and the team estimates a 2% boost in its net asset value. IGM remains the fintech's largest shareholder, he added.