After 10 years in operation, Wealthsimple CEO Michael Katchen says an initial public offering could be in the cards at some point in the future, while an acquisition remains unlikely.
As Canada’s banking sector has been ripe with consolidation over the past few years, Katchen said in an interview with BNN Bloomberg Thursday that the company is “pretty committed to the independent path” regarding the prospect of a potential acquisition by one of Canada’s big banks.
“I think we have the opportunity to build Canada’s leading financial institution in the years ahead,” he said.
Despite the view that a merger or acquisition isn’t in the best interest of the company at this time, Katchen said an initial public offering (IPO) could be a future possibility.
“I think that’s (an IPO) very much in the cards for us ... it’s not a focus for us right now, but I think that’s absolutely a path that we’ll be on,” he said.
The company now boasts more than three million Canadian users with $50 billion of assets under management. Almost half of those assets have been deposited just in the past 12 months.
When asked what it took to get them there Katchen said “It’s taken scale, and it’s taken a commitment to using technology to automate so much of the back office that we can offer all of those savings back to our clients in the future.”
But Wealthsimple’s growth story hasn’t always been smooth sailing and previous expansion efforts proved difficult. In 2017 the company expanded its service to the United States, and later that same year made a move into the U.K. as well.
“I think the big learnings for us back then was, it’s hard to do too many things at once, especially as a new business,” Katchen said.
In 2021 Wealthsimple sold its U.S. and U.K. books to focus on its Canadian business. When asked if it would ever attempt an expansion again Katchen said “Our ambitions are bigger than Canada, but right now for the foreseeable future, we’re going to be focused here. Canada is a huge market, and we still have our work cut out for us.”
While Katchen is confident that the company has a bright future ahead of it no matter the path, he is less confident in the outlook for the next generation of Canadians due to the country’s productivity issues and the current entrepreneurship landscape.
“I’m a deeply proud Canadian who is always worried about the future of Canada, if we want to maintain the prosperity that we have, we have an obligation to diversify our economy and add more innovation,” Katchen said.
“We have some incredible operators and founders down the pipeline that are building great businesses, and we need more and more of it.”
