Private Equity Will Lead FinTech M&A in 2019 – Our January 2019 Report

January 2019

Dear Clients and Friends:

Welcome to 2019 – it promises to be another wild year for economies, politics, markets, and  for m&a values in the seven segments of the Fintech world that we follow and sometimes lead.  It may not be smooth. But so far the forecast is for continued m&a strength led by VC and PE firms. Let’s hope it lasts. Please see our first FinTech m&a report of 2019 below.

A recent report by Pitchbook noted that financial sponsors globally have more than $2 trillion in buying power – led by at least $1 trillion in committed but unspent capital – and abetted by liberal lenders. They recognize a FinTech market that is large, growing, and changing fast, with systems in place that are ripe for replacement by new technologies using SaaS, PaaS, Cloud, Digital Ledger Technology, Big Data, and AI.

Financial sponsors are not the only ones who see that a growing number of people (not just millennials) are open to using new approaches to bank, pay, lend, and shop for financial services. They are not the only ones to note that regulatory pressures also drive market change. (See Basel III, Dodd Frank, GDPR, IFRS, MiFID III, Sarbanes Oxley, Solvency II, etc.)

But VCs and PEs are clearly the most aggressive pursuers of this market. As CB Insights noted last October, last year there were 23 financing rounds that exceeded $100mm. Now, there are at least 30 Fintech companies that exceed $1bn in valuation.

Technology players also see the opportunity. They as well as many financial institutions and – as we discussed in an earlier Fintech Market Update several non-traditional players such as Amazon, Apple, Facebook, Google, IBM, Intel, Microsoft, Oracle, Salesforce, TCS, and Walmart are also looking for ways to take advantage of disruptive change in this arena. But leading them all are financial sponsors that now collectively back hundreds of FinTech firms with billions of dollars. 

We believe that in 2019 m&a values will continue to be strong for FinTech companies with proprietary products, scale, and strong growth prospects.  As we wrote in our August Fintech Market Update: This rising tide is not lifting all boats equally; the weak are not desired and the super-strong have sometimes reached valuations that are not justified by a rational view of the future. But the rest of the market should remain strong in 2019.

As you will see in the report that follows below, some of the more interesting recent transactions include:

  • Euronext (ENXTPA:ENX) agreed to acquire Oslo Børs (OTCNO:OSLO) for NOK 5.9bn (~$687mm), valuing the company at an implied 5.7x LTM revenue and 12.4x LTM EBITDA,
  • CommonBond (New York, NY) raised $400mm in a debt funding round from undisclosed investors,
  • Plaid (San Francisco, CA) raised $250mm in a Series C funding round, implying an enterprise value of $2.7bn,
  • Temenos (SWX:TEMN) agreed to acquire Avoka Technologies for $245mm,
  • Earnin (Palo Alto, CA) raised $125mm in a Series C funding round that included DST Global and Andreessen Horowitz.

We look forward to an active year ahead – and we wish you and your families health, contentment, and strength. 

Please see our January Fintech M&A Report below.

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