- Fintech M&A deal volume reaches three-year high with 198 deals in H1 2019, up from 164 in H2 2018
- Global venture capital investment in fintech achieves record-level in Q2 2019 with $10.9 billion raised
- Excluding the three mega-deals in payments processing, enterprise financial software remained the largest fintech sub-sector, with over 75% of remaining disclosed deal value and just under 50% of all deal volume – 98 deals. Significant deals in enterprise financial software included Thoma Bravo’s acquisition of Ellie Mae, a provider of mortgage loan origination, for $3.7 billion, making it the fourth largest transaction of H1 2019, at 7.5x EV/S.
Three fintech mega-deals totaling $87 billion set the scene for a record-breaking $120 billion in disclosed transaction value for the sector in the first half of 2019, according to the Fintech M&A Market Report from Hampleton Partners.
Hampleton Partners noted that all three of the top transactions were in the payments processing segment: Fidelity National Information Services acquired Worldpay for $43.6 billion; Fiserv acquired First Data for $22 billion and Global Payments acquired Total System Services for $21.2 billion.
Hampleton’s report pointed to a revitalized M&A market since the slump in H2 2018, as well as an overall trend for larger deal sizes: 65% of deals exceeded $100 million in H1 2019, compared to only 54% in 2018 (disclosed deal values).
Jonathan Simnett, director and fintech specialist, Hampleton Partners, said in a statement: “Financial businesses and institutions are increasingly open to adopting large-scale fintech in transaction processing or enterprise financial software, and as the financial services industry re-structures, competition for game-changing assets is increasing.”
With 818 fundraises so far in 2019, the anticipated annualized figure of 1,636 would set a new annual record, narrowly beating those figures recorded in 2017 (1,632) and in 2016 (1,633). Furthermore, excluding the Ant Financial deal of June 2018, Q2 2019 recorded the most fintech fundraising ever with $10.9 billion raised.
All this confirms that, while they seem to be gradually multiplying in number, fintech funding rounds in North America and Europe are becoming larger. However, Asia is not currently sharing the same level of fundraising success, with fundraise count and value stagnating.
Other key trends Hampleton noted is that regtech is on the rise as firms seek to stay compliant through cloud-based platforms and machine learning. Meanwhile, blockchain utilization continues to spread through collaborative platforms like Bitpay with Visa.
Simnett said in a statement: “Q2 2019 proved to be the largest quarter ever for fintech fundraising, with Europe already exceeding its 2018 annual record. As Europe and North America power ahead of the currently moribund Asian fintech fundraising market, we expect this to yield several large-scale fintech M&A transactions in the future.”