£7m injection into fast growth ‘fintech behind the fintechs’: Third Financial

FieldHouse Associates

Private equity firm Grafton Capital has invested £7 million into Third Financial, the fast growing, innovative investment platform and software provider. Grafton Capital’s investment takes it to majority ownership of the business, with £1.5m of fresh capital being injected onto the balance sheet. The deal follows previous investment rounds in 2015 (£2.5m), 2016 (£1.5m) and 2019 (£1.25m) to support the expansion of Third Financial’s infrastructure and outsourcing platform, which sits behind many of the UK’s leading wealth managers, IFA networks, family offices and disruptive fintech firms. This next phase will see a focus on accelerating the growth of the platform while meeting the evolving demands of the market.

Third Financial originally achieved rapid success with ‘Tercero’, its comprehensive, integrated, CRM and portfolio management system for wealth managers – which remains a key part of the business with a sizeable blue-chip client base. In 2016, Third Financial launched its investment platform business and this has quickly achieved significant traction among a broad range of investment firms.

The platform combines the established Tercero system with an efficient, flexible, client-focused outsourcing and custodial operation. This new service – the fintech behind the fintechs – allows its users to support their own clients with market-leading software, while instilling confidence that their operational activities, and client assets, are in safe hands. The technology also enables them to launch a white-labelled direct-to-consumer (D2C) investment platform, or to incorporate the service within their own client-facing app via a comprehensive set of APIs.

Ian Partington, Group Chief Executive Officer at Third Financial, said, “Our vision for the company is to be the go-to provider of technology and custody services for investment firms. While the backbone of our operation is the servicing of traditional wealth managers and advisers, there is also a huge appetite from a raft of exciting fintech companies that require back-end operations, custody and infrastructure to help them bring their innovations to market. Our FCA-regulated service gives all of our customers a cost-effective and holistic solution which is continually updated with new features in response to client needs.

We have a terrific bond with the team at Grafton Capital – and are grateful for the obvious confidence they have in our business – and this further investment reflects that relationship. It’s a real positive to add resilience to our balance sheet, during this volatile time for our industry, and this transaction simplifies our ownership structure.”

Edward Barroll Brown, Founder and Managing Partner at Grafton Capital, said, “We have a long-standing history with the team at Third Financial, dating back to 2015. Since its launch, the platform has been achieving steady annual growth of 40 to 50 per cent, and more recently has done so whilst maintaining profitability – pretty impressive in this economic climate. This investment is about backing Ian and his team to continue on this path of profitable growth. We are confident in the trajectory and the opportunity to serve more great businesses with Third Financial’s market leading infrastructure platform.

Grafton Capital invests in leading technology businesses in growth across Europe, and looks to back exceptional founders and management teams, which is certainly what we have here at Third Financial. We typically make minority growth investments, but are delighted to close this growth buyout, which we are able to do in order to fulfil the needs of the company and leadership team.”