(Montreal) Power Corporation of Canada will not have to go to the bedside of Wealthsimple, which is “well financed” in the immediate future, assures its president and chief executive officer, Jeffrey Orr.
Posted at 11:24 a.m.
The Desmarais family conglomerate, which has a 54.5% stake in the financial services fintech, wrote down the value of its investment by 57%, as part of its second-quarter results. The investment is worth 900 million as of June 30, 2022, compared to 2.1 billion at the same time last year.
Wealthsimple is among the Canadian tech companies that have had to revise their growth ambitions now that consumers are returning to brick-and-mortar stores and the economic horizon looks uncertain. The Toronto-based company told its employees in June that it was laying off 13% of its workforce.
Despite the setback, Mr. Orr defended Wealthsimple on Monday during a conference call with financial analysts. “Management has done an incredible job of creating a brand. She has a large customer base. Customers are satisfied and report a good experience. This segment of the market is the next generation. »
Wealthsimple is “well funded” at the moment and would not need more capital in the short term, assures the leader, who adds that the question remains open in the longer term.
For Power Corporation, its investment in Wealthsimple was a way to gain exposure to fintechs and “see what would happen”. Management has not determined what the company’s role will be in the long-term conglomerate and is keeping its options open.
“It’s not just an asset manager’s bet: we’re in the financial services industry. We wanted to take a stake to see what was to come and get a foothold in the emerging digital sector. Whether we’re going to stay long term or not, I think that’s a decision to be made in the future. »
In June, Wealthsimple chief executive Michael Katchen wrote to employees that the company was refocusing on its core businesses, such as investing and banking services, and on products that he said will fuel the financial innovation, such as cryptocurrencies.
The company will reduce investments in other areas such as peer-to-peer payments, tax and merchant services and restructure teams dedicated to recruiting, marketing, customer success and research.