Financial institutions M&A sector trends: payments — H1 2021 and outlook for H2 2021
The COVID-19 pandemic drove e-commerce to levels never seen before—payment rail, service and solution providers responded with an unprecedented flurry of M&A activity.
Overview
CURRENT MARKET
WE ARE SEEING
- Investors with voracious appetites and deep pockets:
- Private equity spots opportunities to repeat past glories (e.g., Finch Capital’s acquisition of Wirecard Turkey)
- Late-stage investors supercharge IPO flightpaths (e.g., Blackstone’s investment in Mollie and Softbank Vision Fund 2’s investment in Klarna)
- Venture capital back new entrants (e.g., Bankly, Diem, Bottlepay, Balance, Routefusion and Scalapay all successfully raised Seed capital in H1 2021)
- Supermajors seek opportunities for diversification and improvement
- First movers seek scale and scope (>17 consolidation deals in H1 2021)
- Significant uptick in collaboration models:
- Global behemoths favour expansion through JVs (e.g., Mastercard’s JVs with Ukheshe, NumberX and Razorpay)
- Banks opt for partnerships (e.g., Deutsche Bank’s JVs with Fiserv and Silverflow)
KEY DRIVERS/CHALLENGES
- Market consolidation:
- Conquering geographic markets (e.g., Vipps, MobilePay & Pivo merger)
- Expanding geographic reach (e.g., Nomu Pay’s acquisition of Wirecard’s Hong Kong, Malaysia, Philippines and Thailand businesses, and Clearpay’s acquisition of Pagantis)
- Fully integrated service provision (e.g., Unzer’s acquisition of Clearhaus and QuickPay)
- Bolstering commitment for digital currencies (e.g., PayPal’s acquisition of Curv)
- Appetite for Open Banking (e.g., Visa’s acquisition of Tink and EML Payments’ acquisition of Sentenial)
- COVID-19 has lasting impact on digital consumption—exponential growth in e-commerce:
- Customer utilisation levels skyrocketed (Visa hit 1 billion additional PIN-free transactions)
- First movers backed entrants into new territories and business lines (e.g., Zip’s minority equity investments in Spotii and Twisto)
- Attaining the Holy Grail:
- De-SPACs (e.g., Foley Trasimene Acquisition Corp. II’s acquisition of Paysafe and FTAC Olympus Acquisition’s acquisition of Payoneer)
- IPOs (e.g., Wise’s LSE IPO and Affirm’s Nasdaq IPO)
TRENDS TO WATCH
- Increasing expansion conservatism—withdrawal from underperforming markets (e.g., PayPal’s exit from Indian payments market)
- Significant increase in payments regulation, in particular harmonisation of business practices, rules and technical standards across Europe’s card industry
OUR M&A FORECAST
Payments—Publicly reported deals & situationsStratospheric levels of M&A activity, as consumer demand continues to drive organic and inorganic expansion of solution and rail businesses across Europe. Many expect e-commerce growth to continue, notwithstanding cessation of COVID-19-induced lockdowns and travel bans.
Payments—Publicly reported deals & situations
Market highlight:
In less than 1 year since contactless limits increased across Europe, Visa has hit a processing milestone of 1 billion additional PIN-free transactions. Finextra (April 2021)
High appetite and deep pockets
PE/VC—acquisitions/equity investments:
- Mission Holdings and Ally Ventures: Participation in US$50 million Series D funding round for Deserve (June 2021)
- Blackstone: Participation in €665 million Series C funding round for Mollie (June 2021)
- EQT Ventures: Participation in US$23.5 million Series A funding round for Volt (June 2021)
- 9yards Capital and eFounders: Participation in US$15 million Series A funding round for Upflow (June 2021)
- Softbank Vision Fund 2: Participation in US$639 million Series H funding round for Klarna (June 2021)
- Advent International: Acquisition of stake in Planet Payment (June 2021)
- SVB Capital: Participation in US$100 million Series C funding round for Chipper Cash (May 2021)
- Global Ventures: Participation in US$8 million pre-Series A funding round for Mamo (May 2021)
- Guru Capital: Acquisition of Oval Money (May 2021)
- Altos Ventures: Participation in US$20 million Series A funding round for Candex (April 2021)
- QED Investors: Participation in US$20 million Series A funding round for Payhawk (April 2021)
- Gauss Ventures and M&F Funds: Participation in US$80 million Series B funding round for Zilch (April 2021)
- x15ventures:
US$1 million equity investment in Payable (April 2021)
- Bain Capital: Participation in US$21 million post-Seed funding round for Orum (April 2021)
- VC Global Ventures: Participation in US$18.5 million Series A funding round for PayMob (April 2021)
- Vault: Participation in US$2 million Seed funding round for Bankly (March 2021)
- Insight Partners: Participation in US$50 million Series C funding round for Pollinate (March 2021)
- Inflexion: Minority equity investment in CMS Payments Intelligence (March 2021)
- Fasanara Capital: Participation in US$5.5 million Seed funding round for Diem (March 2021)
- Finch Capital: Acquisition of Wirecard Turkey (March 2021)
- Avenir Growth Capital and Tiger Global Management: Participation in US$170 million Series C funding round for Flutterwave (March 2021)
- FinTech Collective: Participation in £11 million Seed funding round for Bottlepay (February 2021)
- Element Ventures: Participation in €4 million Series A funding round for Billhop (February 2021)
- Coatue Management: Participation in US$108 million Series D funding round for BharatPe (February 2021)
- Andreessen Horowitz, Greenfield One and Electric Capital: Participation in US$20 million funding round for Celo (February 2021)
- TLV Partners: Participation in US$13 million funding round for Mesh Payments (February 2021)
- SciFi VC: Participation in US$5.5 million Seed funding round for Balance (February 2021)
- Silverton Partners: Participation in US$3.6 million Seed funding round for Routefusion (February 2021)
- Fasanara Capital: Participation in US$48 million Seed funding round for Scalapay (January 2021)
- SBI Investment and Sony Innovation Fund: Participation in US$15 million Series B funding round for Token (January 2021)
- Addition: Participation in US$102 million Series B funding round for Fast (January 2021)
- Elevator Ventures: Participation in €16 million Series C funding round for Twisto (January 2021)
- Eurozeo Growth, Sprints Capital and Wellington Management: Participation in US$180 million funding round for PPRO (January 2021)
- Coatue: Participation in US$300 million Series D funding round for Rapyd (January 2021)
- IDC Ventures, Fuel Venture Capital and Vulcan Capital: Participation in US$95 million Series C funding round for Curve (January 2021)
- Tiger Global Management: Participation in US$450 million Series C funding round for Checkout.com (January 2021)
- Long Arc Capital: Participation in €25 million Venture funding round for TagPay (January 2021)
Supermajor investments:
- Mastercard and Visa: Participation in US$40 million funding round for Greenwood
(March 2021)
- PayPal Ventures and American Express Ventures: Participation in successful Series A funding round for Codat (March 2021)
Institutional—acquisitions/equity investments:
- National Bank of Egypt/Al Ahly Capital: Acquisition of 75% of Momken (March 2021)
- Bank Pekao: Acquisition of 38.33% stake in Krajowy Integrator Płatności (Tpay) (April 2021)
- EBRD and Goldman Sachs: Equity investment in DgPays (March 2021)
De-SPACs:
- Foley Trasimene Acquisition Corp. II: Acquisition of Paysafe (March 2021)
- FTAC Olympus Acquisition: Acquisition of Payoneer (February 2021)
IPOs:
- Wise: London Stock Exchange IPO (June 2021)
- Affirm: Nasdaq IPO (January 2021)
Scaling-up of market players
A trend for consolidation in the payments market continued between March and June 2021, with a flurry of sizeable deals taking place. S&P Global (June 2021)
Deal highlight:
White & Case advised Tink, a leading open banking platform provider which enables banks, fintechs and start-ups to develop data-driven financial services, on its sale to Visa for €1.7 billion.
Deal highlight:
White & Case advised Nets, the leading payment business in the Nordics, on its acquisition of Checkout Finland.
Mergers:
- Vipps, MobilePay & Pivo: Merger (June 2021)
Acquisitions:
- Openpay: Acquisition of Payment Assist (June 2021)
- EML Payments: Acquisition of Sentenial (June 2021)
- Nium: Acquisition of Ixaris (June 2021)
- Bill.com: Acquisition of DivvyPay (June 2021)
- Nomu Pay: Acquisition of Wirecard’s Hong Kong, Malaysia, Philippines and Thailand businesses (April 2021)
- Hightech Payment Systems: Acquisition of 80% of ICPS (April 2021)
- Ripple: Acquisition of 40% of Trianglo (March 2021)
- Euronet Worldwide:
Acquisition of Piraeus Bank’s merchant acquiring business (March 2021)
- Clearpay: Acquisition of Pagantis (March 2021)
- Clearpay:
Acquisition of PMT Technology (March 2021)
- PayPal:
Acquisition of Curv (March 2021)
- Mastercard: Acquisition of Nets’ corporate services business (March 2021)
- PayPoint:
Acquisition of RSM 2000 (February 2021)
Unzer
Acquisition of Clearhaus (January 2021)
- Unzer:
Acquisition of Clearhaus (January 2021)
- Unzer:
Acquisition of QuickPay (January 2021)
- PayPal:
Acquisition of GoPay (January 2021)
- Nets/Paytrail:
Acquisition of Checkout Finland (January 2021)
JVs:
- Mastercard: WhatsApp payments JV with Nedbank and Ukheshe (April 2021)
- Klarna: Revenue-based e-commerce financing JV with Liberis (June 2021)
- SIA: Instant payments JV with Volante Technologies (June 2021)
- Mastercard: Mobile payments JV with Zamtel (June 2021)
- Visa:
UAE mobile payments JV with Saudi Payments (June 2021)
- Epay: Prepaid products JV with Revolut (May 2021)
- Stripe: Middle East digital payments JV with Network International Holdings (April 2021)
- Mastercard: App-based card JV with NumberX (March 2021)
- Mastercard:
Indian digital payments acceptance: JV with Razorpay (February 2021)
- Visa:
Crypto APIs JV with First Boulevard (February 2021)
- Visa:
Multi-currency debit card JV with TransferWise (January 2021)
Vertical integration:
- Visa:
Acquisition of Tink (June 2021)
- Stripe and Thrive: Participation in US$35 million Series B funding round for Check (January 2021)
New licences/territories/business lines:
- Mastercard: Participation in US$50 million Series D funding round for Deserve (June 2021)
- Zip: Acquisition of minority equity stake in Spotii (May 2021)
- Visa:
Equity investment in Remitly
(May 2021)
- Checkout.com:
Participation in US$110 million Series A funding round for Tamara (April 2021)
- Zip:
Participation in €16 million Series C funding round for Twisto (January 2021)
Service providers stockpile growth capital
- Silverflow: Successful minority equity investment from Global PayTech Ventures (April 2021)
- Deserve: Successful US$50 million Series D funding round, led by Mastercard, Mission Holdings and Ally Ventures (June 2021)
- Mollie: Successful €665 million Series C funding round, led by Blackstone (June 2021)
- Volt: Successful US$23.5 million Series A funding round, led by EQT Ventures (June 2021)
- Upflow: Successful US$15 million Series A funding round from 9yards Capital and eFounders (June 2021)
- DNA Payments: Successful £100 million investment from Alchemy Partners (June 2021)
- Klarna: Successful US$639 million Series H funding round, led by Softbank Vision Fund 2 (June 2021)
- Chipper Cash: Successful US$100 million Series C funding round, led by SVB Capital (May 2021)
- Curve: Successful £10 million funding round (May 2021)
- Paysend: Successful US$125 million Series B funding round, from Infravia Growth Capital, Hermes GPE Innovation Fund and Plug and Play (May 2021)
- Pine Labs: Successful US$285 million funding round, led by Baron Capital Group, Duro Capital, Moore Strategic Ventures and Ward Ferry Management (May 2021)
- Mamo:
Successful US$8 million pre-Series A funding round, led by Global Ventures (May 2021)
- Tamara:
Successful US$110 million Series A funding round, led by Checkout.com (April 2021)
- Candex:
Successful US$20 million Series A funding round, led by Altos Ventures (April 2021)
- Payhawk:
Successful US$20 million Series A funding round, led by QED Investors (April 2021)
- Zilch:
Successful US$80 million Series B funding round, led by Gauss Ventures and M&F Fund (April 2021)
- Cardlay:
Successful €8 million Series B
funding round, led by Global PayTech Ventures (April 2021)
- Payable: Successful US$1 million equity investment from x15ventures (April 2021)
- Orum: Successful US$21 million post-Seed funding round, led by Bain Capital (April 2021)
- PayMob: Successful US$18.5 million Series A funding round, led by VC Global Ventures (April 2021)
- Bankly: Successful US$2 million Seed funding round, led by Vault (March 2021)
- DgPays: Successful equity investment from EBRD and Goldman Sachs (March 2021)
- Pollinate: Successful US$50 million Series C funding round, led by Insight Partners (March 2021)
- Airtel Africa Mobile Money: Successful US$200 million investment from The Rise Fund (March 2021)
- CMS Payments Intelligence: Successful minority investment from Inflexion (March 2021)
- Diem: Successful US$5.5 million Seed funding round, led by Fasanara Capital (March 2021)
- Flutterwave: Successful US$170 million Series C funding round, led by Avenir Growth Capital and Tiger Global Management (March 2021)
- Klarna:
Successful US$1 billion funding round (March 2021)
- Billhop:
Successful €4 million Series A funding round, led by Element Ventures (February 2021)
- BharatPe:
Successful US$108 million Series D funding round, led by Coatue Management (February 2021)
- Celo:
Successful US$20 million Series A funding round, led by Andreessen Horowitz, Greenfield One and Electric Capital (February 2021)
- Mesh Payments:
Successful US$13 million Venture funding round, led by TLV Partners (February 2021)
- Balance:
Successful US$5.5 million Seed funding round, led by SciFi VC and Stripe (February 2021)
- Routefusion:
Successful US$3.6 million Seed funding round, led by Silverton Partners (February 2021)
- Scalapay:
Successful US$48 million Seed funding round, led by Fasanara Capital (January 2021)
- Synch Payments:
Successful €5.9 million Seed funding round led by AIB, Bank of Ireland, Permanent TSB and KBC Bank Ireland (January 2021)
- Token:
Successful US$15 million Series B funding round, led by SBI Investment and Sony Innovation Fund (January 2021)
- Wyre:
Successful US$5 million Venture funding round, led by Stellar Development Foundation (January 2021)
- Fast:
Successful US$102 million Series B funding round, led by Addition and Stripe (January 2021)
- Alma:
Successful €49 million Series B funding round, led by Cathay Innovation and Idinvest (January 2021)
- Twisto:
Successful €16 million Series C funding round, led by Zip and Elevator Ventures (January 2021)
- PPRO:
Successful US$180 million funding round, led by Eurazeo Growth, Sprints Capital and Wellington Management (January 2021)
- Grab:
Successful US$300 million late-stage funding round, led by Hanwha (January 2021)
- Rapyd:
Successful US$300 million Series D funding round, led by Coatue (January 2021)
- Curve:
Successful US$95 million Series C funding round, led by IDC Ventures, Fuel Venture Capital and Vulcan Capital (January 2021)
- Checkout.com:
Successful US$450 million Series C funding round, led by Tiger Global Management (January 2021)
- TagPay:
Successful €25 million Venture funding round, led by Long Arc Capital (January 2021)
Banks opt for partnership model
- Deutsche Bank: Payments acceptance JV with Fiserv (June 2021)
- Goldman Sachs:
Digital payments JV with Visa (June 2021)
- Deutsche Bank: Cloud-based card acquiring services JV with Silverflow (May 2021)
- BankDhofar: Payment solutions JV with Thawani Technologies (April 2021)
- Railsbank:
Digital wallet JV with Yimba (April 2021)
Click here to download 'Financial services M&A reaches dizzying heights as COVID-19 lockdowns and travel bans come to an end' PDF
[View source.]