Canadian ETF pioneer Som Seif’s Purpose Financial announced Friday it is acquiring Montreal-based Thinking Capital, an online lender to small businesses, for an undisclosed amount of cash and securities.
The deal comes as Purpose aims to grow its financial technology services platform alongside its $5-billion ETF and mutual funds business.
Purpose and Thinking Capital said the deal presents an opportunity to create unique investment products that combine direct loan origination with Purpose’s asset management.
“Thinking Capital is a clear leader in the small- to medium-sized business lending space, with credit adjudication technology and presence that are unmatched in the Canadian market,” Seif, Purpose Financial’s chief executive, said in a statement.
Since launching in 2006, Thinking Capital has provided online loans to small and medium-sized businesses ranging from $5,000 to $300,000.
The alternative lender also has strategic partnerships with Canada’s big banks and payment processors, including a referral partnership with CIBC struck in November 2015, in which business owners using Thinking Capital’s platform are offered incentives to move their business banking to CIBC.
“While 98 per cent of businesses in Canada are small businesses, many have limited access to capital to fund their growth. As an early innovator in this market, we have spent the last decade evolving the language of small businesses credit,” Thinking Capital CEO and co-founder Jeff Mitelman said in a release.
After the transaction closes, Mitelman will become a managing partner of Purpose, the companies said. Thinking Capital’s headquarters will remain in Montreal and all employees will remain with the company after the transaction is complete.