Fintech FNZ | A large partner of the fund continued for 6 billion

At the other end of the world, one of the most important private investments in the cash register is in turmoil. FNZ shareholders who allege that they have been unjustly diluted for the benefit of Quebecers’ woolen stockings and other major investors are demanding more than 6 billion (US 4.6 billion) from this financial technology specialist.

The name of this giant with closed capital, therefore not registered on the stock market, is unknown to the general public. Domiciled in New Zealand, it is behind a digital wealth management platform used by 650 financial and insurers institutions, such as Aviva and Barclays, which manage more than US 1,700 billion.

Founded in 2003, the financial technology company (fintech) is still not profitable and its financial assessment worries the Standard & Poor’s (S&P) rating agency, but that did not prevent it from being valued at US 20 billion in 2022 – there has been no updates since. It has more than 6000 employees.

As of December 31, the value of the house’s placement in this multinational was estimated at more than 3 billion.

This affair is complex, but it could be expensive for large investors such as the institution that manages the savings of Quebecers if the complainants should have won. Their allegations have not yet been proven in court.

Common front

The rebellion emanates from employees and ex-employees who have accumulated small blocks of actions from the service provider rather than obtaining money premiums, as is often the case with a start-up company in the technological sector.

Placed with the High Court of New Zealand, the judicial request alleges a significant loss of value for the complainants due to a dilution, the result of the mechanism used by FNZ to collect US 1.5 billion since last year to replenish its boxes.

“The combined impact of transactions has enabled a limited group of institutional and private investors to obtain important options to increase their participation, through subscription vouchers, which have been issued for a negligible counterpart,” says Kiwi Claylp, a trustee entity which says it represents a large proportion of complainants, without however specifying the number.

In the documentation that we were able to consult, the privileged titles granted last year to the large shareholders guarantee them a privileged rate of return, a special dividend as well as subscription vouchers – a financial instrument which allows its holder to buy an action at a price fixed in advance – additional.

The complainants consider themselves left. They alleged that their shares were worth 4.6 billion US before the recent fundraisers carried out by FNZ.

“These transactions will have the effect that the small shareholders will be fully diluted if FNZ should be sold or make an entry into the stock market below 8.3 billion US,” they say.

The head of the management of the fintechBlythe Masters, and 16 other administrators and former members of the Board of Directors, some of which from the Caisse, are also targeted.

At FNZ, the Quebec pension scheme manager is the reference shareholder alongside large firms such as the Canada Pension Payment Investment Office, Motive Partners (United States) and Temasek Holdings (Singapore).

“FNZ takes note of the complaint filed and considers it completely devoid of foundation,” she said, in a declaration sent by email. We are convinced that our administrators have always acted in the best interests of the company, its customers, its employees and all its stakeholders. »»

The cash register did not want to comment on the case.

Club select

In the private investment niche, FNZ is one of the eight investments held by the institution whose value was greater than 3 billion on December 31. These cases are very rare in the card portfolio.

Despite its notable growth since its foundation, which was mainly done by acquisitions, FNZ lost nearly 2 billion US, including 713 million US just last year, despite a turnover of US 1.6 billion.

This situation is attributed to acquisitions of recent years, expansion in new markets and investments in new products. This hardly impresses Standard & Poor’s, which assesses the debt issued by FNZ.

“The results of the company were significantly lower than expectations,” said the rating agency in a report released on May 22, where passages are found which contain expressions such as “insufficient liquidity” for the next year and “less favorable business prospects than they were”.

S&P decided to add the “negative” label to the perspectives of the young shoot, which often puts the table to a discount.

His credit note is currently B -, which means that the company is considered a speculative investment.

Even with a US 1.5 billion harvest from its shareholders last year, the current situation fears a new call for funds with the risk of diluting existing shareholders like the fund – unless the latter is decided to take out the checkbook once again.

“We anticipate insufficient liquidity over the next 12 months due to prolonged cash consumption,” said S&P.

At the very least, it will be necessary to wait in 2027 before seeing FNZ approach the point of financial equilibrium, according to S&P.