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Tiger Global to buy $50 million worth of Wealthfront stock: source

Published 03/23/2018, 01:51 PM
Updated 03/23/2018, 02:01 PM
© Reuters.  Tiger Global to buy $50 million worth of Wealthfront stock: source

By Anna Irrera

NEW YORK (Reuters) - U.S. investment firm Tiger Global Management is in the process of buying $50 million worth of shares of online asset management startup Wealthfront, a source familiar with deal said on Friday.

Tiger Global is acquiring the stock on the secondary market mostly from former Wealthfront employees, the source said.

The deal comes a few months after Tiger Global led a $75 million investment into Wealthfront, one of the largest independent companies known as robo-advisers.

Bloomberg reported earlier on Friday that Wealthfront's valuation was cut to $500 million through the round announced in January. The source who spoke to Reuters disputed the valuation but could not provide the actual figure.

It is unclear how the latest $50 million deal by Tiger Global affects Wealthfront's valuation.

Representatives for Tiger Global did not immediately respond to requests for comment.

Wealthfront and other robo-advisers automatically create and manage portfolios made up of low-cost exchange-traded-funds for clients with as little as a few hundred dollars to invest.

They are part of a wave of young companies that take advantage of new digital technologies to offer financial services for clients that were traditionally seen as too expensive to service by established financial institutions and target a new generation of investors.

Wealthfront's assets under management have nearly doubled over the past year to more than $10 billion.

The model pioneered by Wealthfront and its competitors has prompted established financial institutions to launch similar services over the past few years, including Fidelity Investments Charles Schwab (NYSE:SCHW) Corp and Fidelity Investments. This has led some to question whether the startups can secure enough clients to succeed.

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This has prompted startups to diversify their offering with added tools and features.

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