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Digital mortgage lender Nesto has acquired the third-largest mortgage finance company in Canada, CMLS Group, which it says makes it the largest technology-enabled lender in Canada.
The acquisition will allow Nesto to offer both residential and commercial mortgages, the company said in a press release. The company’s headcount will surpass 1,000 across 10 offices, from a workforce of 310 employees across Canada, and it will have more than $60 billion in mortgages under administration.
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Nesto said it wiIl continue to serve both lenders’ partners and clients, with all CMLS Group executives and employees transitioning to the combined entity. CMLS shareholders will have an equity stake in the combined company, it added.
“Combining our strengths will allow us to better serve Canadians and set new standards in the mortgage industry,” Nesto chief executive Malik Yacoubi said in a press release. “We look forward to building Canada’s mortgage ecosystem of the future together with our new colleagues at CMLS.”
The Montreal-based online mortgage lender, which had just marked its fifth year last month, started as a broker and is now a full-stack lender. It originates billions in mortgage volume per year. It was the first to offer Canadians “150-day rate hold.”
The company grew to what it is right now through investments, raising $165 million in three rounds of funding, from prominent venture capital firms and financial institutions, including Diagram Ventures, Portage, National Bank’s NAventures (National Bank of Canada’s corporate venture capital arm), BMO Capital Partners, IGM Financial Inc., Mike Paulus and Mike Rowell.
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It said the CMLS transaction included investments from the same institutions, as well as Fonds de solidarité FTQ and Fondaction. The value was not disclosed.
CMLS, which was established as a commercial lender in 1974, provides lending and other services across nearly all commercial and single-family residential real estate markets in Canada. It delivers its products and services through CMLS Financial, Intellifi and CMLS Asset Management.
All Nesto, CMLS and Intellifi brands will remain under the combined company.
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Its chief executive, Sam Brown, will serve as president and head the commercial division of the combined entity. Yacoubi will serve as chief executive.
“Joining forces with Nesto will accelerate our next chapter of growth and further help our people, partners and clients succeed,” Brown said.
• Email: dpaglinawan@postmedia.com
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