Pension funds overhaul board of fintech FNZ amid $4.6-billion lawsuit

Major shareholders in London-based FNZ Group, including Canadian pension funds, overhauled the board of the financial software provider as they look to stabilize the company’s finances and fend off an ongoing shareholder lawsuit seeking US$4.6-billion.

FNZ provides a digital wealth management platform used by some 650 financial institutions, including North American clients such as Bank of Montreal. Two of Canada’s largest pension funds own significant stakes in the company.

The Caisse de dépôt et placement du Québec, the Montreal-based pension fund that manages $552-billion, is FNZ’s largest shareholder and invested early in the startup in 2018.

The Canada Pension Plan Investment Board (CPPIB), the country’s largest pension fund with $864-billion of assets, invested US$1.1-billion in FNZ in 2022.

Since then, the company, which was founded in 2003 in Wellington, New Zealand has run into significant challenges that include a lawsuit from minority shareholders and rising financial losses that FNZ incurred as it expanded rapidly into Europe, North America and Asia.

Software company FNZ and Canadian pension funds caught in legal dispute as shareholders claim unfair treatment

The overhauled board with several new directors has a mandate to revamp the company’s business model to bring it “to a more sustainable, more mature level,” Caisse chief executive officer Charles Emond said in a recent interview.

FNZ has a “great product” but also a high “cash burn rate” that needs to be reined in, he said.

Earlier this month, FNZ swapped its board chair, appointing Stephen Welch and citing his experience working with regulated financial services businesses in Britain. Previous chair Gregor Stewart is staying on the board as chair of its risk committee.

Five of the company’s 14 directors were replaced previously, including two board seats controlled by the Caisse. As of July, new appointees include Justin Shaw, an operating partner in the Caisse’s private equity division, and Denis Turcotte, managing partner of Brookfield Asset Management Ltd.

FNZ’s chief financial officer, Aashish Kamat, left the company in July after a year-and-a-half in his role.

The company reported a pre-tax loss of US$1.36-billion in 2025 – roughly double its loss in the previous year – even as revenue rose 9 per cent to US$1.13-billion, according to the company’s most recent filings.

“We brought in a new chair because we think, you know, there’s a lot of challenges in that situation,” Mr. Emond said. “He’s just not a chair there for governance. He’s really an executive chair that has experience as to how to assist us.”

Spokespeople for the Caisse and CPPIB declined to comment on the lawsuit against FNZ as it is before the court. A spokesperson for FNZ could not immediately be reached for comment.

The minority shareholder group that is suing FNZ in a New Zealand court has criticized the company’s leadership and its largest shareholders, alleging that employee morale is at a low ebb, based on internal engagement metrics.

Instead of sticking to prior cost-cutting measures, FNZ raised billions of dollars and then ramped up its spending, only to now “do another U-turn and heavily reduce costs,” FNZ co-founder Mike Stevens, a former employee who is part of the shareholder group suing the company, said in a news release.

“A number of things here simply don’t add up,” he said.

The group alleged in the lawsuit that their ownership stakes were unfairly diluted when the company raised new capital several times, starting in 2024, on terms that gave its largest investors preferential terms.

The Caisse and CPPIB participated in those fundraising rounds, including a US$650-million equity injection that was undertaken after the lawsuit was filed.

Caisse and CPPIB increase investment in FNZ as software firm battles shareholders over dilution

The minority shareholders are seeking US$4.6-billion in restitution. The company is contesting the lawsuit, which it says it without merit.