New investments suggest change in FNZ direction
Financial technology company FNZ has built a multibillion-dollar empire selling services to other business customers.
However, its two most recent investments in New Zealand suggest the company could be interested in expanding into more consumeroriented products.
In New Zealand last year, FNZ bought retail investment platform Hatch and in October took a minority stake in local financial advice firm Pa¯ua Wealth Management.
These investments differ from others it has made, in that both supply services directly to retail customers, outside the financial services industry.
Pa¯ua chief executive, Donna Nicolof said FNZ was selected as a partner for a number of reasons, including its “global network and commitment to reinvesting in leading-edge technology, which will continue to deliver greater functionality to our clients”.
FNZ does not have a stake in any other advice firms in New Zealand and the investment was based on a long-standing relationship with Pa¯ua.
FNZ raised US$1.4 billion ($2.28b) from CPP Investments and Motive Partners at the start of the year, and much of it has been used to fund a series of acquisitions.
Most of these purchases have been bolt-on businesses that can be easily added into the group’s financial services platform.
Examples include onboarding startup Appway, a Swiss private banking technology platform called New Access, and South African funds administration provider Silica.
Hatch, in particular, is a consumer business pitched at everyday New Zealanders, while Pa¯ua advises highnet-worth individuals, trusts, foundations and family offices.
Independent wealth
Pa¯ua is an independent financial advisory firm founded in 2020 by former BNZ private bankers Donna Nicolof, Chris Glackin and Belina Teoh.
Nicolof said at launch that some advisers were incentivised to sell products, which could create conflicts of interest.
Pa¯ua’s point of difference is that it doesn’t accept commissions or referral fees, collecting only services fees from customers.
In an October press release, Nicolof said investment from FNZ would provide growth capital and help the business expand its “global network”.
The business case for Hatch also involves expanding into overseas markets with the help of FNZ’S extensive
network.
FNZ has said it intended to “invest heavily in Hatch to broaden the range of asset classes, investment styles and expand the offering in other markets”.
Earlier this year, Jarden agreed to merge its direct investment platform with Hatch and retain a 25 per cent stake in the combined entity.
The deal emerged from talks about using Jarden’s broking system to add NZ and Australian stock market shares to the Hatch platform.
Jarden declined, because it would be enabling a competitor, but saw value in combining it with the more modern and user-friendly platform.
Jarden Direct told clients the new platform would offer share and bonds from NZ, Australia, the UK and the US — and “leverage the breadth of FNZ”.
“It will combine the best of both worlds, connecting the global scale and cutting-edge technology of FNZ with Jarden’s capital markets experience and insight,” it said.
Direct controversy
FNZ’S purchase of Hatch and investment in Pa¯ua Wealth Management means the global business will be offering services directly to some consumers.
In August, FNZ stirred up controversy in the UK by partnering directly with an advice firm to build a platform for its simpler clients.
FNZ provides technology to existing advice platforms providers in the UK and its deal with Fairstone prompted concern it would undercut its own customers.
The Financial Times reported some in the industry were concerned FNZ could absorb large portions of the market and turn advisers into “shop windows” for the platform.
FNZ founder Adrian Durham pushed back on this in a Linkedin comment, saying FNZ had no intention of directly dealing with advice firms.
The group has also invested in Nokkel, a London-based startup which aims to give homeowners more insight into their property’s value and other investment opportunities.
It is both a direct-to-consumer application and a portal that advisory firms can integrate into their own services — which FNZ has reportedly been offering to its platform clients.