Financial Technology, Data, and Analytics

Dear Clients and Friends,

The report that follows contains an update on m&a deals, values and trends in the seven sectors of the global Fintech industry that we follow and sometimes lead.

We live in interesting times. Many of my colleagues who are part of the Fintech world are simultaneously optimistic and nervous. The current business, tax, economic and regulatory environments have combined to make this a great time to be in Fintech. The market is booming. But it’s clear that some politicians around the world are contemplating policies that could mess it up. So here are three thoughts for those in the US, UK, EU, China and elsewhere that would mess with a system that is doing quite well:

1. Keep borders open. Fintech is global – and to benefit consumers it needs to stay that way. This is not only a US issue. Funding Circle (UK); Stripe (Ireland); Ant Financial (China); Bloomberg (US); Thomson Reuters (Canada) and others need access to international markets. If politicians close markets to others, there will be repercussions. And that will hurt us all.

2. Focus on smarter regulations not more, not fewer – and getting more coordination among agencies would help. We know that open borders does not mean unfettered ones. We need reasonable rules to – among other things – ensure security, enforce contracts, protect intellectual property rights, reduce corruption, and protect the weak, unsophisticated and unwary. But the complexities of multiple conflicting regulations administered by competing bureaucracies makes the system more challenging to navigate and expensive without commensurate benefit. A moratorium on new regulations alone doesn’t help – it just solidifies the status quo. And we certainly don’t want regulations that reduce access to talented labor (see #3) or stifle innovation. (See our recent commentary on Net Neutrality).

3. Cherish smart, industrious immigrants. The US leads Fintech innovation in part because the US has access to a talented multi-cultural labor pool. Five of the six winners of Nobel Prizes affiliated with US universities in 2016 were foreign born. At least half of the privately held start-up firms valued at $1bn or more worldwide were founded by immigrants. That doesn’t mean politicians should ignore the challenges of immigration. It does mean that we should encourage global policies that allow the most talented individuals to work where they can be the most productive – whether that be their home country or someplace else. All politicians should want to find ways to retain those immigrants who may become the next Sergei Brin (Russia – Google); Elon Musk (South Africa – eBay, Tesla, SpaceX), Jerry Yang (Taiwan – Yahoo!); Vivek Ranadive (India, TIBCO); Pieter Thiel (Germany – PayPal); or Jan Koum (Ukraine – What’s App). Cherish smart immigrants – don’t denigrate them.

Some of the more interesting m&a transactions, trends and values are discussed in the following report. Among others, we note:

• Warburg Pincus (New York, NY) agreed to acquire a 35% stake in Avaloq for $304mm, valuing the company at an implied 1.6x LTM revenue and 10.5x LTM EBITDA,
• Cowen Group (NASDAQ:COWN) agreed to acquire Convergex Group for $116mm,
• Robinhood (Palo Alto, CA) raised $110mm in a Series C funding round led by new investor DST Global, and that included new investors Thrive Capital and Greenoaks Capital Partners, and existing investors New Enterprise Associates, Ribbit Capital, and Index Ventures,
• Singapore Life (Singapore) raised $50mm in a Series A funding round co-led by Impact Capital Holdings, a subsidiary of Credit China Fintech Holdings, and IPGL,
• TMX Group (TSX:X) has completed the previously announced sale of its wireless and extranet infrastructure services businesses known as TMX Atrium to Intercontinental Exchange (ICE). Marlin & Associates acted as the exclusive financial and strategic advisor to TMX.

Please continue reading for more information on each sector below.