UBS to Acquire Roboadvisor Wealthfront for $1.4 Billion
Earlier this week, Hazel — a company backed by Walmart and Ribbit Capital — made headlines by revealing plans to purchase both One Finance and Even. While the deal was notable for its novelty and the potential scale that Walmart offers, it didn’t take long for it to be topped by another major FinTech acquisition. On Wednesday, UBS announced its intent to buy Wealthfront for $1.4 billion. The transaction is expected to close in the second half of this year.
Wealthfront is a roboadvisor platform that has grown to prominence in recent years. With the service, consumers can invest in a customized portfolio, with Wealthfont also offering such features as autorebalancing and tax loss harvesting. Meanwhile, the company also launched a checking and savings account called Cash in 2019. Currently, the platform has more than 470,000 clients in the United States, with a combined total of more than $27 billion in assets under management.
In a press release announcing the acquisition, UBS Group Chief Executive Officer Ralph Hamers said, “Adding Wealthfront’s capabilities and client base to our global investment ecosystem will significantly boost our ability to grow our business in the US. Wealthfront complements our core business in the US providing wealth management to high net worth and ultra high net worth investors through trusted relationships with financial advisors, and will enhance our long-term ambition to deliver a scalable, digital-led wealth management solution to affluent investors.”
On the other end of the transaction, Wealthfront CEO David Fortunato stated, “Partnering with UBS will allow Wealthfront to offer our clients additional value-added services and best in class research that will help accelerate our vision to make growing wealth delightfully easy. We couldn’t be more excited to have found a strategic partner who has the same view on the power of technology as we do. We look forward to providing our service to even more millennial and Gen Z investors.”
With a value of $1.4 billion, UBS’s purchase of Wealthfront is obviously a big deal. In fact, beyond that price tag, the acquisition could have a major impact on the FinTech landscape. For one, while FinTech IPOs have picked up in the past year, it’s possible that a successful deal here could lead some startups to seek acquisition as an alternative. And, returning to that dollar figure, TechCrunch points out that the valuation could also be a factor not only in future purchase prices but also in valuations used for fundraising rounds. Lastly, it will be interesting to see if customers notice any changes to the Wealthfront platform (positive or negative) once the deal is closed. In any case, it’s been an eventful 2022 for FinTech so far — and it’s only getting started.