Pen­sion plans pump­ing $229 mil­lion into Portag3 Ven­tures’ fin­tech fund

At least 14 back­ers com­mit new money as search is on for next Wealth­sim­ple


TORONTO The Caisse de dépôt et place­ment du Québec and the Public Sec­tor Pen­sion In­vest­ment Board (PSP) are among a group of at least 14 in­vestors pump­ing $229 mil­lion into an in­ter­na­tional fin­tech fund run by Portag3 Ven­tures, an early stage in­vestor es­tab­lished by com­pa­nies un­der the um­brella of the Des­marais fam­ily’s Power Corp.

The dis­closed in­sti­tu­tional and strate­gic in­vestors com­mit­ting the new funds also in­clude in­surance com­pa­nies and fi­nan­cial in­sti­tu­tions from Canada, France, Is­rael and the United States. Among them are Aviva France, Harel In­surance & Fi­nance, and Sil­i­con Val­ley’s NSV Wolf Cap­i­tal.

An ear­lier fundrais­ing round in 2018 drummed up $198 mil­lion from other limited part­ners in­clud­ing Na­tional Bank of Canada, In­tact Fi­nan­cial Corp. and Eq­ui­table Bank.

“To have a larger fund re­ally al­lows us to compete in to­day’s mar­ket and en­sures that we … have the ca­pa­bil­ity and depth to fol­low on in those com­pa­nies that prove to be top per­form­ers,” said Adam Fe­lesky, chief ex­ec­u­tive of Portag3 Ven­tures.

Portag3’s first fund, which closed in 2016, was backed en­tirely by com­pa­nies as­so­ci­ated with Power Corp., in­clud­ing Power Fi­nan­cial, IGM Fi­nan­cial Inc. and Greatwest Lifeco, which re­main an­chor in­vestors in the sec­ond fund.

“We’ve lever­aged their trust and their as­sis­tance in help­ing us de­velop our plat­form to bring re­ally cred­i­ble in­vestors, not only do­mes­ti­cally but from around the world,” Fe­lesky said.

In an in­ter­view, he said he sees the pen­sions that came on board in the lat­est round as po­ten­tial direct in­vestors along­side the fund in fin­techs that be­come more es­tab­lished down the road.

Portag3 Fund II tar­gets 10- to 20-per-cent own­er­ship stakes in the com­pa­nies it in­vests in, and more than $100 mil­lion has been in­vested so far in a num­ber of com­pa­nies, Fe­lesky said.

The largest hold­ing is Toronto-based Koho, which is po­si­tion­ing it­self as an al­ter­na­tive to tra­di­tional banks with no-fee mo­bile spend­ing and track­ing.

Most re­cently, the Portag3 fund led a Se­ries A in­vest­ment round for Toronto-based In­te­, a cloud-based ma­chine-learn­ing plat­form that al­lows busi­nesses to in­ter­act with cus­tomers and gather “con­sumer in­tel­li­gence.”

Fe­lesky said he hopes some of the com­pa­nies the fund in­vests in can repli­cate the suc­cess for Portag3 that on­line low-cost in­vest­ment man­ager Wealth­sim­ple has had for early backer Power Fi­nan­cial.

Wealth­sim­ple had more than $3.4 bil­lion in as­sets un­der ad­min­is­tra­tion as of Dec. 31, 2018.

The fo­cus of Portag3 Fund II is global, but Fe­lesky said Cana­dian in­vest­ments are looked at with an eye to choos­ing those with po­ten­tial to be “the win­ner in the mar­ket” for do­mes­tic fin­tech.

“It’s more likely a win­ner takes all,” he said, not­ing the rel­a­tive size and de­vel­op­ment of the Cana­dian mar­ket­place.

The fin­tech in­vest­ment via the Portag3 fund isn’t the first time Mon­treal’s Caisse de dépôt has shown in in­ter­est in the mar­ket seg­ment. Last year, the Que­bec pen­sion was among of group of in­vestors be­hind Luge Cap­i­tal, a $75-mil­lion ven­ture cap­i­tal fund launched to de­velop early stage fin­tech firms and ar­ti­fi­cial in­tel­li­gence ap­pli­ca­tions for fi­nan­cial ser­vices.

To have a larger fund re­ally al­lows us to compete in to­day’s mar­ket.

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