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Hello Fintech Friends,
This week, Empower – a fintech provider alternative credit underwriting on a mission to solve access to affordable credit for everyday Americans – signed an agreement to acquire my old employer Petal*, a consumer credit card provider that uses cashflow-based underwriting to expand access to credit, as well as Cashalo, a consumer credit and lending company in the Philippines. This marks the next step in the journey for Petal, which was founded in 2016 and crossed 400,000 cardholders. In 2023, Petal spun-off its cash flow underwriting software business, Prism Data, which will not be included in the acquisition. Terms weren't disclosed, but Empower previously raised $175 million through its Series B.
Please find another week of fintech exits and deep reads below. (👍👎 Have feedback for us? Let us know!)
📖 Read of the Week
According to Restive Ventures, "The fintech sector has 10 times as many large M&A deals ($50 million+) as IPOs," with a median acquisition price of $193 million and an average at $403 million, which leads Restive to caution that VCs shouldn't just focus on blockbuster outcomes and IPOS in fintech, as covered by Axios.
"How much money would you save up if you invested your spare change in the stock market? The answer, in practice, seems to be about $2,500 over nine years," according to Axios' look at savings investment app Acorns.
Also this week, CB Insights releases its Venture Trends Q1 report, showing fintech funding falling 16% QoQ.
And FT Partners releases its Monthly Market Update & Analysis.
☯️ Exits
💻 IPOs & SPACs
Oaktreehalted the IPO of Banca Progetto SpA and entered bilateral talks after receiving a non-binding bid for the bank at a higher price than the likely listing valuation.
Investment platform Linqtoagreed to go public through a merger with SPAC Blockchain Coinvestors Acquisition in a deal valued at $700 million.
Ibotta, which provides a digital marketing platform that offers consumers cash rebates, plans to raise $450 million in its IPO at a market value of $2.8 bilion.
In 2023, FinTechs in the US🇺🇸 attracted 5x more funding than the next country, the UK🇬🇧
The UK still attracted more than 4x any other country beyond the US, even if funding dropped more than the global average.
Source: Motive Ventures - Dealroom co pic.twitter.com/7p1kH46Hxu— Marcel van Oost (@oost_marcel) April 7, 2024
🤝 M&A - Fintech
Fixed income, derivatives and ETF electronic trading platform Tradeweb signed an agreement to acquire Institutional Cash Distributors, an investment platform based in Colorado, for $785 million.
Gresham Technologies, a provider of reconciliation software and tools, post trade automation and regulatory reporting solutions, was acquired by private equity firm Alliance Bidco for £146.7 million.
Underbanked credit provider Empower agreed to acquire Petal* and Cashalo.
Linedata, a provider of asset management and credit technology, acquiredDreamQuark, a French startup specializing in the development of AI for the financial services sector.
Data management provider to the asset management sector Rimes is being sold by investment firm EQT to private equity firm Five Arrows.
First @x1creditcard is sold to @RobinhoodApp and now @petal being sold to @EmpowerHQ showing some industry consolidation.
Hard to scale in isolation. https://t.co/wwhFipzAVu— Michael Jenkins (@MJenkins88) April 10, 2024
🏦 M&A - Bank and FinServ
Brookfield Asset Management is in talks to buy a majority stake in private-credit manager Castlelake, with $22 billion in AUM, for $1.5 billion.
HSBC continues to exit underperforming markets, the latest via a sale of its Argentinian business to Grupo Financiero Galicia for $550 million.
Financial services information and credit-scoring company Experian will acquire Australian credit bureau illion for $542 million, in a bid to expand into Australia and New Zealand.
Bain Capital sold its shares in India's Axis Bank via a block trade at $12.87 per share, raising $429 million.
Blue Owl Capital is launching a real estate finance strategy through its acquisition of real estate lender Prima Capital Advisors for $170 million.
First Abu Dhabi Bank is studying potential acquisition targets in Turkey, including Yapi Ve Kredi Bankasi.
There is an interesting narrative out there that everyone will issue their stablecoin.
Esp. for non-fintechs & fintechs that want to capture NIM.
However, isn't issuing a branded stablecoin the same as working with BaaS?
🧵 pic.twitter.com/XvFDWCu5L4— Jack Chong (@jackchong_jc) April 12, 2024
Who made today “hate on FedNow” day”? pic.twitter.com/cr1KshzBS5— John Piazza (@John_PiazzaIV) April 12, 2024
In 2020 & 2021, fintech was all up-and-to-the-right and correlated.
In 2022 & 2023, fintech was retracing down and correlated.
In 2024 & 2025 there will be a great divergence: Companies that 'righted the ship' will grow and thrive, while the ones that did not will fall off.— Nik (@NikMilanovic) April 10, 2024
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