US fintech acquires Canadian asset manager to empower FAs

Meanwhile, Home Capital announces strategic investment in fintech

US fintech acquires Canadian asset manager to empower FAs
Steve Randall

Two deals have been announced that reflect an increasing trend of financial institutions strengthening their ties with fintechs.

A US fintech has signed a binding Memorandum of Understanding to acquire 90% of the outstanding shares of Northern Coast Asset Management.

Smartchase says that the acquisition of the Toronto-based manufacturer of alternative investment funds as a major step in becoming a leading Canadian fintech and a leading provider of financial services and structured investment products to independent financial advisors in Canada.

"This acquisition by Smartchase will bring together two highly synergetic assets: Northern Coast's knowledge of the private capital market and the role played by independent financial advisors, combined with Smartchase's Fintech Platform", said Thomas Jones, CEO of Smartchase Corp. and President of Northern Coast Financial Inc.

Smartchase wants to address the imbalance between the dominance of the largest banks in the US and those in Canada, citing World Economic Forum stats from 2014 which showed that the biggest five Canadian banks dominate the Canadian financial landscape, owning 89% of the market while the largest five banks in the United States only have a 35% share of their respective market.

"This combination of human experience and Fintech efficiency means that Smartchase's Canadian subsidiary, NCAM, will empower independent financial advisors in Canada to compete head-to-head with their much larger competitors with greater efficiency and stronger compliance."

Mortgage, small business loans subsidiaries
Included in the acquisition are Northern Coast Strategic Fund Inc. ("NCSF") and Northern Coast ABL Inc. ("NCABL"), both wholly owned subsidiaries of NCAM. NCSF was founded in 2015 and has emerged as

an innovative private capital fund specializing in alternative residential mortgages for Canadian Homeowners. NCABL is set to launch its first private capital fund in Q4-2019 and will fund alternative asset-backed loans to Canadian small businesses.

Smartchase will release additional details of the acquisition prior to the signing of the definitive purchase agreement, currently planned to take place for June 20th, 2019.

Home Capital invests $3m in Lendified
Meanwhile, Home Capital has announced a $3 million strategic investment in Lendified, the online small business lender founded by former Canadian bank executives.

“Home Capital is well-positioned to serve the self-employed borrower,” affirmed Benjy Katchen, Executive Vice President and Chief Digital and Strategy Officer at Home Capital. “Our investment in Lendified will help us deliver on our objectives of empowering the growth of independent business owners and creating innovative digital banking solutions for our customers and partners.”

The two firms have worked together for several years on some key initiatives.