Fintech M&A Deals Come Of Age with USD40 Billion Transaction Value in First Half of 2018
- Machine learning, financial media, data solutions and payment processing companies fueling first-half 2018 deals
- Blockchain solutions, insurtech and Europe''s Revised Payment Service Directive (PSD2) expected to drive next wave of fintech M&A
London, UK - 8 October 2018. The latest Fintech M&A Market Report from international technology mergers and acquisitions advisors, Hampleton Partners, reveals that the fintech sector reported 141 transactions in the first half of 2018, with a total disclosed transaction value of nearly USD40 billion (USD39.3 bn), more than 26 percent up from the prior half year.
The surge in transaction values is due to increasing consumer and enterprise acceptance of digital banking, payments and financial data services, driving big ticket transactions such as Blackstone''s acquisition of Thomson Reuters for USD17.0 billion.
Jo Goodson, managing director, Hampleton Partners, said:
"Fintech M&A activity is coming of age after the initial surge in somewhat random deal-making amongst the very early innovators. Now, corporate and financial buyers alike are chasing larger and more targeted investments which can help streamline back-office operations, improve the digital customer experience and cut costs."
Europe''s challenger banks are acting aggressively to fuel their growth, so banks are targeting software companies in segments from trading to sales and accounting aimed at updating their legacy infrastructure. One such deal is Royal Bank of Scotland''s purchase of FreeAgent, an AIM-listed Edinburgh-based provider of accounting software.
Digital payments M&A on the rise
The digital payment and transaction processing segment accounts for two of the fintech sectors top five deals and continues to deliver high multiples. A prime example was Paypal making a USD2.2 billion all-cash acquisition of Stockholm-based payments provider, iZettle, at 19x trailing revenues. In another landmark transaction, French payment services business, Worldline, agreed to by the payments unit of Swiss stock market operator, SIX Group, for USD2.75 billion.
As for online and electronic payments processing, whilst the transactions were predominantly focused in the U.S market, the largest of these deals went to the USD442 million sale of First Data''s card processing business in seven European countries to its Italian rival SIA.
Other prominent acquirers in 1H2018 include payments processing company, Paysafe Group, which was itself taken over by buyout firms, Blackstone and CVC capital Partners in 2017.
The future of fintech M&A
Jo Goodson continued: "For the remainder of 2018 going into 2019, we''re anticipating a number of blockchain solutions will come to market and that insurtech could spark a major wave of deals as traditional insurers step up their efforts to innovate their consumer and enterprise offerings through M&A.
"Going forward, the implementation of Europe''s Revised Payment Service Directive, or PSD2, is likely to be a major game changer for the deal landscape, as it encourages pan-European competition and participation in the payments industry, including non-banks. New entrants will find a level playing field and harmonised consumer protection and rights which will encourage new entrants to the financial services market and fuel further M&A deal growth and valuations."
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