Verafin closes $515M recap with management becoming largest shareholding group

Verafin, the world’s largest financial crime management software company, has completed a CDN $515 million equity and debt recapitalization. The transaction closed early this month. Financial terms were not disclosed.

New equity funding was provided by Spectrum Equity’s current investing fund, Spectrum Equity VIII, Information Venture Partners II with participation by new backers Northleaf Capital Partners, BDC Capital and Teralys Capital.

Senior debt financing for the transaction was led by Wells Fargo Capital Finance and included Scotiabank in the syndicate.

Following the transaction, Verafin co-founders, management and employees will collectively represent the largest shareholding group.

Exiting from Verfin are Information Venture Partners Fund I/RBC Venture Partners which provided initial venture capital financing for Verafin in 2009, and Spectrum Equity VII which led a substantial growth equity financing in 2014.

St. John’s, Newfoundland based Verafin is the industry leader in enterprise Financial Crime Management, providing a cloud-based, secure software platform for Fraud Detection and Management, BSA/AML Compliance and Management, High-Risk Customer Management and Information Sharing. Nearly 3,000 banks and credit unions use Verafin to effectively fight financial crime and comply with regulations.

photo credit: Verafin

News Release

Verafin Completes C$515 Million Equity and Debt Recapitalization; Continues Partnership with Spectrum Equity and Information Venture Partners
Represents one of the largest ever growth financings of a Canadian software business

Funding will accelerate Verafin’s product innovation roadmap and the expansion of sales and marketing initiatives into large financial institutions

September 25, 2019

(St. John’s, Newfoundland) – Verafin, the world’s largest financial crime management software company, announced today the completion of a C$515 million equity and debt recapitalization. Verafin has enjoyed tremendous growth in recent years, and its long-term vision of fighting financial crime through collaboration and cross-institutional analysis is fast becoming the industry standard for fraud detection and anti-money laundering (AML) regulatory compliance. The recapitalization allows Verafin to aggressively pursue its growth plans while remaining an independent company.

New equity financing was provided by Spectrum Equity’s current investing fund and Information Venture Partners’ (IVP) new fund with participation by new backers Northleaf Capital Partners, BDC Capital and Teralys Capital. Senior debt financing for the transaction was led by Wells Fargo Capital Finance and included Scotiabank in the syndicate.

Following the transaction, Verafin co-founders, management and employees will collectively represent the largest shareholding group. A prior IVP fund provided initial venture capital financing for Verafin in 2009, and a prior Spectrum Equity fund led a substantial growth equity financing in 2014.

Verafin provides a cloud-based, secure software platform for Fraud Detection and Management, BSA/AML Compliance and Management, High-Risk Customer Management and Information Sharing. Nearly 3,000 banks and credit unions use Verafin to effectively fight financial crime and comply with regulations. Leveraging its unique big data intelligence, visual storytelling and collaborative investigation capabilities, Verafin significantly reduces false positive alerts, delivers context-rich insights and streamlines the daunting BSA/AML compliance processes that financial institutions face today.

The equity and debt financing follows a period of sustained and rapid growth at Verafin. During this time, the Company has achieved many financial and operational milestones:

Annual Recurring Revenue Growth: C$100 million in annual recurring revenue was achieved in the first quarter of 2019, representing 87% growth in annual recurring revenue since the beginning of 2017.
New Business Growth: The Company achieved 108% growth in sales bookings between 2017 and 2019, and 102% growth in average deal size over this same time period.
Customer Value: Consistently, 97% of Verafin customers renew annually. This is further testament to the ongoing innovation and value that Verafin delivers to customers.
Up Market Momentum: Verafin has signed 25 financial institutions with over US$5 billion in assets in the last 18 months and is experiencing increased growth and inbound interest from this market segment.
Information Sharing and Collaboration: Verafin has experienced rapid growth of its secure information sharing platform for 314(b)-registered institutions that are members of the FRAMLxchange. Over 1,000 Verafin clients and 900 additional financial institutions have adopted the platform for collaboration and are now actively sharing information.
Product Innovation: Verafin has developed a unique customer-driven development process which provides rapid deployment of new product capabilities to meet and exceed customer demands in the rapidly changing financial crime landscape. This product-centric approach, which has been continually refined over the past 16 years, is supported by a seasoned development team of over 400 developers — resulting in one of the largest and most experienced fraud and anti-money laundering-focused development teams in the industry.
“We are very excited to begin this new phase of Verafin’s journey. This financing round with our long-term partners Spectrum Equity and IVP allows Verafin to accelerate our investments in product innovation and customer success, and continue our progress in market penetration of larger financial institutions,” said Jamie King, CEO of Verafin.

Chris Mitchell, Managing Director at Spectrum Equity said, “We are thrilled to be renewing our partnership with Verafin via this new investment to support its next phase of growth. We look forward to working with Jamie and the rest of the Verafin team to continue to support their product-innovation led go-to-market strategy that has enabled the Company’s explosive growth.”

Dave Unsworth, General Partner at IVP added, “Verafin is in the very early innings of its mission to create the world’s most effective crime fighting network. We see a massive opportunity ahead for Verafin to continue to lead this market transformation through continued product innovation and thought leadership.”

Additional financial terms were not disclosed.

Houlihan Lokey served as the financial advisor to Verafin.

About Verafin

Verafin is the industry leader in enterprise Financial Crime Management, providing a cloud-based, secure software platform for Fraud Detection and Management, BSA/AML Compliance and Management, High-Risk Customer Management and Information Sharing. Nearly 3,000 banks and credit unions use Verafin to effectively fight financial crime and comply with regulations. Leveraging its unique big data intelligence, visual storytelling and collaborative investigation capabilities, Verafin reduces false positive alerts, delivers context-rich insights and streamlines BSA/AML compliance processes. Verafin has industry endorsements in 47 states, including the Texas Bankers Association, Western Bankers Association, Florida Bankers Association, Illinois Bankers Association, Massachusetts Bankers Association, and Credit Union National Association Strategic Services. Visit www.verafin.com, email info@verafin.com or call 1.877.368.9986.

About Spectrum Equity

Spectrum Equity is a leading growth equity firm providing capital and strategic support to innovative companies in the information economy. For over 25 years, the firm has partnered with proven entrepreneurs and management teams to build long-term value in market-leading software, information services and Internet companies. Representative investments include Ancestry, Bats Global Markets, Definitive Healthcare, Ethoca, GoodRx, Grubhub, Lynda.com, Origami Risk, RiskMetrics, SurveyMonkey and World-Check. For more information, including a complete list of portfolio investments, visit www.spectrumequity.com.

About Information Venture Partners

Information Venture Partners is a Toronto-based team of experienced venture capital investors that focus on early-stage companies in B2B FinTech and Enterprise SaaS. Current investments include BigID, Coconut Software, Flybits, Knowtions, LendingFront, PostBeyond, Procurify, Q4, Sensibill, Verafin and YayPay. For more information, visit http://www.informationvp.com.

Corporate and Investor Relations Contact
Robert WEBB, robert.webb@verafin.com 709.752.3050 ext. 7819
Media, Analysts and General Contact
Brian HARTLEN, brian.hartlen@verafin.com 709.725.8235