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July 31, 2019updated 08 Aug 2019 10:57am

FT Partners: Fintech financing exceeds £10bn

By Douglas Blakey

Fintech financing in the second quarter reached $10.9bn, making it the second-most-active quarter ever. And if you exclude the mega Ant Financial $14bn financing round in the second quarter last year, the second quarter this year represents a record, writes Douglas Blakey

We are only just half way into 2019, but so far so good: this year is on track to be the second-strongest year ever for global fintech financing volume.

The second quarter of 2019 includes 24 financing rounds that were worth $100m or more. This represents a 20% increase over the same period last year, according to FT Partners’ Q2 2019 FinTech Insights Report.

The largest financing of the quarter is Greensill’s $800m funding round, led by SoftBank. At the same time, the largest North American financing is UiPath’s $568m Series D round led by Coatue.

Meantime, both Europe and North America are trending towards all-time highs for total financing volume in 2019. Asia is holding steady at historical levels – again when excluding Ant Financial’s mega rounds from 2016 and 2018.

Venture appetite for fintech remains strong. Nine VC firms make 10 or more new and follow-on investments during the first half of 2019. Strategic participation in fintech financing also remains strong, with four corporate venture firms making more than five new and follow-on investments during the first half of the year.

Global fintech M&A volume for the first half of 2019 of $148.3bn is already at a new full-year record high. This surpasses the 2018 level of $127.8bn and the prior record of $138.3bn in 2015.

2019 Mega deals

During 2019, three of the four largest fintech M&A transactions ever have occurred.

  • FIS’s $43bn acquisition of Worldpay;
  • Fiserv’s $41bn acquisition of First Data, and
  • Global Payments’ $25bn acquisition of TSYS.

 

Overall, 63% of fintech M&A deals in the first half of 2019 involve acquisitions of North American companies. This accounts for 65% of the total dollar volume. Global fintech IPO activity has been steady so far in 2019, with 12 total IPOs.

Q2 payments highlights

Payments highlights include Marqeta raising $260m in a series E fundraising led by Coatue Management in May. This funding values the payments startup at almost $2bn.

Marqeta has doubled revenues each year for the last three years, and the company is now talking about a possible IPO by the end of 2020. New investors include Vitruvian Partners and Spark Capital. Meantime existing investors Visa, Iconiq and Goldman Sachs also participated.

In the second quarter, the largest payments funding deal is at TransferWise. In May, TransferWise said that it is now valued at $3.5bn following a $292m secondary funding round. Lead Edge Capital, Lone Pine Capital, and Vitruvian Partners led the stock purchase. At the same time existing investors Andreessen Horowitz and Baillie Gifford also expanded their stakes.

Other notable payments transactions in the second quarter involve Checkout.com and WorldRemit. UK-based Checkout.com raised $230m in May from investors including Insight Partners and DST Global. Other investors include Singapore’s sovereign wealth fund GIC, Blossom Capital and Endeavor Catalyst. This results in a valuation for Checkout.com of approaching $2bn.

In June, UK remittances outfit WorldRemit raised $175m from Leapfrog, TCV and Accel. This funding round values WorldRemit at an estimated $900m.

A smaller, but nonetheless interesting, payments deal is Nationwide Building Society investing in bill payment startup Ordo, which was established by former members of the Faster Payments scheme. The April deal is estimated at around $60m.

Ordo offers protection from invoice and payments fraud. It allows businesses to send payment requests directly to their customers via the Ordo app. The customer is immediately notified that they have received a smart request, which they can then view, and make a real-time account-to-account payment.

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