UK headquartered funds firm M&G has taken a minority stake in digital wealth manager Moneyfarm as part of a broader partnership which will see the launch of a "new investment solution".
M&G will use Moneyfarm's ‘platform as a service' to offer an innovative, digital product aimed at the next generation of retail customers in the UK.
Moneyfarm and M&G will also explore a range of other opportunities to partner in other European wealth markets.
MFM Holding (Moneyfarm), the digital wealth manager said on 26 January that it has agreed a funding round raising £44.1m, led by M&G and including Poste Italiane S.p.A (Poste), which has been a minority shareholder in Moneyfarm since 2019.
Since it launched in 2012, Moneyfarm has raised £139m.
The new funding round will be used in three key areas, to support future development, expanding its product proposition and building out its new B2B2C proposition through strategic partnerships.
The private placement will be completed by the end of the first quarter of 2022, subject to regulatory approvals and will see M&G, a leading international savings and investment business, with over £370b of assets under management and administration, acquire a minority stake in Moneyfarm.
In 2021, Moneyfarm saw assets under management increasing 72%, positive net inflows of 128% and a 73% increase in new customers compared to 2020. Moneyfarm now has over 80,000 clients and over £2.2bn in AuM.
In addition to the fund raise, Moneyfarm and M&G signed a commercial partnership for the launch of a new UK digital investment solution under the M&G Wealth brand.
Designed by M&G Wealth, the new direct digital service will be tailored to meet a range of customer risk appetites and profiles through a collection of multi-asset model portfolios, backed by a selection of actively-managed and passive funds.
This B2B2C commercial agreement, the first of its type in the UK for M&G, reinforces the strength of Moneyfarm's business model. Moneyfarm already has a number of successful B2B2C partnerships in Italy including Poste Italiane (Postefuturo Investimenti), Unicredit's Buddybank (Steppy by Moneyfarm) and Banca Sella (Sella Evolution powered by Moneyfarm), serving thousands of customers.
Direct investing in the UK has seen rapid growth in the last five years, with an average annual increase in assets under management of 18% to reach £351b by the end of June 2021. Within this sector, demand for digital investment services has accelerated, and now accounts for 19% of all UK direct customers. Moneyfarm is considered one of the pioneering providers of this emerging segment of the market, offering a modern approach to investing through its proven digital platform technology and marketing expertise.
Giovanni Daprà, co-founder and chief executive at Moneyfarm, said: "Moneyfarm was founded in 2012 on the core principle that personal investing should be simple and accessible. Our distinctive partnerships with established players in the industry such as Poste Italiane, Allianz and UniCredit demonstrate the real value that can be created by combining the agility and innovation of a direct, digital fintech business with the scale and experience of an established provider.
"Having launched in the UK five years ago, we are very excited to be partnering with a proven name in M&G on the next stage of our journey and welcome them as an investor."
David Montgomery, Managing Director at M&G Wealth added: "We have been very impressed with Moneyfarm's innovative approach and are excited to support the Company in its growth plans. The first milestone will be to start working together in the UK to build a simple and effective digital offering for the benefit of a new generation of savers."