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Digital mortgage lender Nesto has acquired Canada's third-largest mortgage finance company, CMLS Group, making it Canada's largest technology-based lender, according to the company.
The acquisition will enable Nesto to offer both residential and commercial mortgages, the company said in a press release. The company's workforce will increase to over 1,000 in ten locations, from 310 employees across Canada. The company will manage mortgages valued at over $60 billion.
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Nesto said it would continue to serve both the lenders' partners and clients, with all CMLS Group executives and employees transferring to the combined entity. CMLS shareholders would retain an equity stake in the combined entity, it added.
“By combining our strengths, we can better serve Canadians and set new standards in the mortgage industry,” said Nesto CEO Malik Yacoubi in a press release. “We look forward to working with our new colleagues at CMLS to build the mortgage ecosystem of the future in Canada.”
The Montreal-based online mortgage lender, which just celebrated its fifth anniversary last month, started as a broker and is now a full-stack lender, originating billions of dollars in mortgages annually and was the first to offer Canadians a “150-day rate lock-in.”
The company grew to what it is today through investments, raising $165 million in three rounds of funding from notable venture capital firms and financial institutions, including Diagram Ventures, Portage, National Bank's NAventures (the corporate venture capital arm of National Bank of Canada), BMO Capital Partners, IGM Financial Inc., Mike Paulus and Mike Rowell.
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The CMLS transaction was said to include investments from the same institutions as well as from the Fonds de solidarité FTQ and the Fondaction. The value was not disclosed.
CMLS was founded in 1974 as a commercial lender, providing loans and other services to virtually all commercial and single-family residential real estate markets in Canada. The company distributes its products and services through CMLS Financial, Intellifi and CMLS Asset Management.
All Nesto, CMLS and Intellifi brands will remain in the merged company.
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Chief Executive Officer Sam Brown will serve as president and lead the commercial division of the combined company. Yacoubi will serve as chairman of the board.
“Joining forces with Nesto will accelerate our next chapter of growth and further enable our employees, partners and customers to succeed,” said Brown.
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