Hi Fintech Friends,
Continuing our Q3 edition of Signals, this week we investigate the financial services and fintech M&A activity that took place over the last quarter.
Q3 in Review
2. Where in fintech is M&A happening?
Unlike the venture funding we tracked in Signals 3.1, M&A is inclusive of financial services and banking activity, which skews towards larger round sizes. Last quarter’s M&A consisted of 83 transactions comprising $53 billion+ in activity (across 35 disclosed transactions; 48 were undisclosed). Of that, $11 billion came from 25 fintech transactions, and $42 billion from only 9 financial services transactions.
The 6 largest transactions in Q3 all came from financial services, and all surpassed $2 billion in size:
One of the most notable was Intercontinental Exchange’s purchase of Ellie Mae for $11 billion, only 15 months after private equity group Thoma Bravo had acquired the digital mortgage software for $3.7 billion. (Marc Rubinstein does a great job breaking down the acquisition and ICE’s strategy here).
There were also a notable number of repeat acquirers last quarter:
Mercer Global Advisors is on an investing spree in wealth management, with acquisitions of Argosy Wealth Management, MJ Smith, and Summit Wealth Advisors.
Swedish open banking platform Tink acquired Instantor, a lending workflow digitization software, and OpenWrks, an open banking infra provider.
Nubank acquired Cognitect, the maker of Clojure, and Easynvest, a mobile investing platform.
Mastercard made a gigantic acquisition of payments platform Nets, as well as experience marketplace IfOnly.
Empower Retirement bought both PFM Personal Capital and retirement planner Mass Mutual.
Unsurprisingly, banks and exchanges dominate the deal sizes (with ICE’s Ellie Mae acquisition making up 100% of disclosed exchange acquisition volume). StoneCo, the Brazilian financial technology solutions provider, made an interesting move into e-commerce and B2B fintech with its acquisition of retail solutions provider Linx.
There were 6 IPOs in Q3:
China Bohai Bank raised $1.8 billion in its Hong Kong IPO.
Quicken Loans, rebranded as Rocket Companies, raised $1.8 billion as well in a lukewarm public offering.
Vertex tax software went public and raised $402 million.
Insuretech Lemonade raised $319 million in its IPO.
Lightspeed POS raised $305 million.
Banking-as-a-service provider nCino raised $175 million.
Lastly, the last quarter saw the advent of SPACs, a tech exit strategy growing in popularity as more richly-valued private companies consider alternate paths to market from IPO. Two fintech-focused SPACs raised capital in Q3 (and many more were announced). Fintech venture firm Ribbit Capital’s SPAC raised $350 million, and Fusion Acquisition, led by senior executives from State Street, raised $305 million. It remains to be seen how successful these SPACs are at sustainably bringing private fintechs to-market.
