Information on the Target

Common Wealth Pension Services Inc., known as Common Wealth, is a software-as-a-service (SaaS) company that operates within the Canadian group retirement market. The company has established a robust full-stack platform for group retirement plan administration, which is designed to support members in achieving long-term financial security. By offering an intuitive user interface and expert customer support, Common Wealth empowers employers of various sizes to provide attractive retirement benefits, while equipping financial advisors with innovative tools to enhance client engagement and drive the growth of their group retirement services.

Common Wealth currently serves over 1,100 employers across Canada and has experienced rapid adoption, particularly among small and medium-sized businesses (SMBs) and their advisors. Their commitment to accessible retirement solutions is emphasized through their vision of offering a “retirement plan for life” that extends beyond traditional workplace offerings. This mission has been recognized internationally, as evidenced by the company receiving Pensions & Investments’ prestigious global Innovation Award for Best Technology.

Industry Overview in Canada

The SaaS industry has been a powerful driver of digital transformation across Canada, particularly within the financial services sector. As businesses increasingly prioritize technological solutions for efficiency and compliance, there is a growing demand for platforms that facilitate retirement planning and administration. This expansion is fueled by evolving workforce demographics and an increasing recognition of the importance of retirement security among Canadians.

According to recent statistics, the Canadian retirement market is undergoing significant changes, with an emphasis on innovative solutions that cater to diverse employee needs. With baby boomers retiring and millennials taking over the workforce, there is an urgent necessity for competitive retirement solutions that can adapt to the financial needs of employees at different life stages.

The group retirement sector, specifically, is expected to experience substantial growth as businesses recognize the value of offering compelling retirement plans to attract and retain talent. This trend is particularly pronounced among SMBs, which remain a crucial part of the Canadian economy yet often lack the resources of larger firms to implement comprehensive retirement solutions.

Despite challenges posed by economic fluctuations and regulatory changes, the overall outlook for the SaaS retirement solutions industry in Canada remains positive, underpinning companies like Common Wealth as pivotal players in this market landscape.

The Rationale Behind the Deal

The C$15.0 million senior secured note investment from Flow Capital into Common Wealth serves multiple strategic purposes. Primarily, the funds will enable Common Wealth to accelerate its product innovation initiatives, broaden its customer base, and scale operations effectively. As the demand for modern retirement solutions grows in Canada, this investment aligns with Flow Capital's commitment to supporting companies that exhibit high growth potential.

This capital infusion is designed to enhance Common Wealth's ability to realize its mission of making retirement security attainable for all Canadians. By investing in a leader in the Canadian retirement sector, Flow Capital demonstrates confidence in the future of the industry and the value of innovative technology-driven solutions.

Information about the Investor

Flow Capital Corp. is a publicly traded entity that specializes in providing flexible growth capital and alternative debt solutions tailored to high-growth companies. Established in 2018, Flow Capital has successfully financed numerous businesses across North America and the UK, with a focus on helping firms achieve accelerated growth without the dilutive consequences of equity financing or the complexities associated with traditional banking arrangements.

The company primarily supports revenue-generating, venture capital-backed, and founder-owned businesses seeking capital ranging from $2 to $10 million. With a strong emphasis on fostering high-growth opportunities, Flow Capital is well-positioned to make impactful investments like that in Common Wealth, contributing to the growth of promising enterprises.

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This deal presents a compelling opportunity for both Flow Capital and Common Wealth. Given Common Wealth's strong market positioning and its innovative retirement platform, the investment appears to be well-aligned with Flow Capital's strategy of supporting high-growth companies. The anticipated acceleration of product innovations and expansion plans should position Common Wealth as a leader in the Canadian retirement services sector.

Furthermore, the SaaS model adopted by Common Wealth continues to attract interest in the tech-driven economy, demonstrating resilience even amid market fluctuations. This deal not only underlines the significance of accessible retirement solutions but also showcases the growth trajectory expected in this industry.

Additionally, with an increasing number of employers recognizing the importance of competitive retirement offerings for employee retention and satisfaction, there is significant potential for Common Wealth to capture further market share. The potential for returns from this investment is enhanced by the strong demand for their services, particularly among SMBs.

Overall, the collaboration between Flow Capital and Common Wealth has the potential to become a win-win scenario, fostering growth in the sector while positively impacting the retirement planning landscape across Canada.

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