By Valentina Za
MILAN (Reuters) - Digital wealth manager Moneyfarm has agreed to buy British digital pension adviser Profile Pensions in a cash-and-share deal to expand its client base and service range, it said on Tuesday.
Moneyfarm's shareholders, British money manager M&G, Italian post office Poste Italiane, Cabot Square Capital and United Ventures, will finance the deal through a capital increase.
Following the transaction, Profile Pension investor Smedvig Capital will become a minority investor in Moneyfarm.
"The cash portion of the deal came from our shareholders. That's a testament to the good relationship we have with them, especially in light of the current market environment," said Giovanni Daprà, co-founder and chief executive of Moneyfarm.
M&G had invested in Moneyfarm at the start of the year, taking a minority stake under a 44 million pound ($54 million)funding round which valued the fintech company at up to 350 million pounds.
With its cloud native proprietary technology for automated pension advice, Profile Pensions serves 24,000 customers and has some 870 million pounds in assets under management (AUM).
"We expect to fully integrate the platform so as to serve our customers on a broader set of needs," Daprà told Reuters.
Financial details of the transaction, which is expected to close by mid-2023, were not disclosed.
The deal will drive Moneyfarm's AUM to more than 3.3 billion pounds for more than 115,000 customers, a statement said.
"We're already quite big for a digital player but not yet at the scale we wish to be. This is an important milestone for us. It accelerates our path towards breaking even," Daprà said.
In May co-founder Paolo Galvani had said the latest funding round would fuel development for a number of years and ruled out a stock market listing in the foreseeable future. Daprà confirmed an eventual bourse listing was not on the horizon.
Daprà said Moneyfarm would continue to focus on expansion in Britain, where it started operating in 2016, growing AUM on average by 80% a year.
Asked about the impact of market turmoil, he said Moneyfarm continued to "register positive net inflows at the end of each month with double digit growth."
While the cost of living crisis bites, he added, "the need for a simple, low-cost, diversified portfolio of financial assets is intact."
Barclays advised Moneyfarm on the deal.
($1 = 0.8205 pounds)
(Reporting by Valentina Za; editing by David Evans)