September 28, 2022

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InvestCloud merging with Tegra118 | Financial Planning

When private-equity firm Motive Partners acquired Fiserv’s investment services business in 2019, Cheryl Nash, the president of the business at that time, declared it would be just the first of many deals to come.

More than a year later, she’s being proved right. Motive Partners is combining Nash’s company, now called Tegra118, with InvestCloud, which builds a variety of cloud-based applications for advisors, in a recapitalization deal that values the combined wealth management technology provider at $1 billion.

InvestCloud and Tegra118 both take a modular approach to software design. Instead of a comprehensive platform, the companies build individual applications for tasks like financial planning, performance reporting or fee billing that firms can select a la carte.

This approach, along with the prospect of putting InvestCloud’s product design capabilities on top of Tegra118’s processing power, will appeal to large broker-dealers and wirehouses, says William Trout, director of wealth management at Javelin Strategy & Research.

“The combination of Tegra118 and InvestCloud creates a portfolio management juggernaut that will put serious heat on competitors like Vestmark and Envestnet,” Trout says in an email. “Longer term, the inclusion of Finantix should add differentiating, more bespoke capabilities in terms of the digital experience (and onboarding, specifically) for the [high-net-worth] market.”

Tegra118’s APL software, which connects asset managers with a vast network of broker-dealers and RIAs, will be the foundation of what InvestCloud co-founder and CEO John Wise calls “the world’s largest financial supermarket” of investment products.

InvestCloud CEO John Wise wants to build “the world’s largest financial supermarket.”

InvestCloud

“Combining manufacturers with our distributors is going to be a major play for us,” Wise says.

While this has been the company’s ultimate goal, Tegra118 speeds up the timeline by two or three years, Wise says.

The deal also includes Finantix, a global private banking fintech in Motive Partners’ portfolio that will strengthen InvestCloud’s presence in Europe and Asia, Wise said in a statement.

Tegra118 is a staple in the U.S. advice industry, and is the reason why InvestCloud is valued at $1 billion, Kyle Van Pelt, executive vice president of sales at wealth management fintech company Skience, wrote on Twitter.

InvestCloud is known for configurability and customization; Tegra118 is known for its scale, Van Pelt added in an email.

“Motive [Partners] has placed yet another bet that a digital gold rush is taking place in the wealth management space,” Van Pelt says in an email. “The devil is always in the integration details with these sorts of things. If they can pull it off, they will be able to help a lot of firms.”

InvestCloud was founded in 2010 and is headquartered in Los Angeles with offices in New York, London, Geneva, Singapore and Sydney. With Tegra118 and Finantix, the company says it now has more than $4 trillion in assets on its platform, generates $285 million in revenue and employs more than 900 people.

Joining Motive Partners in the deal is private equity firm Clearlake Capital Group. Though he declined to give specifics, Wise says the total investment from the firms is in excess of $500 million.

InvestCloud’s previous backer, growth equity firm FTV Capital, is exiting.

Tegra118 declined multiple requests for a comment.