By Amy-Jo Crowley and Pablo Mayo Cerqueiro
LONDON - Smart Pension, a British pension services provider backed by JPMorgan and Legal & General, is in discussions with investors to raise more than 100 million pounds ($123.13 million) worth of equity capital, two sources close to the matter told Reuters.
The company has hired U.S. investment bank Lazard to help it secure the funds, said the sources, who asked not to be named as the discussions are private. Negotiations are advanced but remain subject to due diligence, one of them said.
Sources did not provide a valuation for the funding round, as terms are not yet final.
Listed investment fund Chrysalis valued its 20.8% stake in Smart Pension at 112.9 million pounds in March, implying an equity valuation for the company of close to 545 million pounds, based on its financial statements and Reuters' calculations.
A spokesperson for Smart Pension declined to comment. Lazard declined to comment.
Proceeds from the round will fund the company's expansion, including in the United States, and potential add-on acquisitions, this source said.
Smart Pension generated 43.3 million pounds in revenue in the 18 months to December 2021 and incurred a total loss of 49.2 million pounds, as per its latest public accounts.
Shareholders are not expected to exit alongside the equity raise and may instead put money into the round, one source said. Other existing investors include Barclays, DWS, Natixis Investment Managers, Link Group and Fidelity International Strategic Ventures.
The equity raising comes at a difficult time for venture capital funding, which dropped 18.6% last year from 2021's record levels amid market turbulence, according to PitchBook data.
Smart Pension last raised 40 million pounds from CIBC Innovation Banking in July, according to a press release.
Founded in 2014, the start-up runs a master trust pension scheme with more than 1 million members, allowing employers to outsource their corporate plans.
It also offers its technology platform Keystone to government and financial institutions around the world.
The company announced the acquisition of Ensign Master Trust in October, adding 158 million pounds worth of pension assets.
($1 = 0.8121 pounds)