Financial services mergers and acquisitions in the UK and Europe: sector trends in H2 2021 | H1 2022 — Brokers/Corporate Finance
Marginal improvement in investor sentiment for high-quality brokers, especially in online brokerage, crypto trading, and carbon credit trading.
Insight
current market
- Relatively stable/limited growth
We see
- Marginal improvement in investor sentiment for high quality brokers of:
- Private funders (e.g. Bridgepoint’s minority investment in ACT)
- Asset managers (e.g. Quercus acquisition of Dom Inwestycyjny Xelion)
- Trade consolidators (e.g. the acquisition of Keytrade by Swissquote)
- Established pan-European banks are returning to inorganic growth mode thanks to:
- Acquisitions (for example, acquisition by BNP Paribas of the remaining 50% of Exane)
- Partnerships (e.g. JV services to issuers of BNP Paribas with CACEIS)
- Online trading/investment platforms:
- Growth capital storage (>5 funding rounds in last 12 months)
- Achieve critical mass and engage in mergers and acquisitions (e.g. Robinhood’s acquisition of Ziglu)
Main Drivers/Challenges
- Private Equity sees growth opportunities for:
- Carbon credit trading (e.g. Bridgepoint minority stake in ACT)
- Cryptocurrency trading (e.g. JC Flowers acquisition of 30% of LMAX)
- Established banks favor:
- Online brokerage solutions (e.g. acquisition of Random Capital by Erste)
- Scale for capital markets solutions (e.g. Bank of Ireland’s acquisition of Davy)
- Targeted growth in the United States (for example, the acquisition of Amherst Pierpont by Santander)
- Dismantling of historical partnerships (e.g. takeover of Exane by BNP Paribas)
- Growth capital available for:
- Established online platforms (e.g. PrimaryBid’s US$190m Series C and Moonfare’s US$125m Series C)
- New market entrants (e.g. Shares’ US$40m Series A, Lightyear’s US$8.5m Series A, and Peaks’ €5m fundraiser)
Trends to Watch
- Prevalence of “hire acquisitions” by well-established Ibs – low-key deals to secure specific HR expertise and client relationships
- Fertile ground for de-SPAC opportunities?
- Platforms are taking the plunge (e.g. eToro/SPAC FinTech Acquisition Corp. V and TradeStation/Quantum FinTech Acquisition Corporation)
- But the stakes are high (e.g. Dune SPAC’s lawsuit against TradeZero)
Our forecasts of mergers and acquisitions
Growing consolidation in the online brokerage market as customer sentiment coalesces among fewer trusted service providers. Strategic acquisitions by established Ibs of digital channels for product delivery.
Investor appetite
Highlight of the case:
White & Case advised Gopher Investments on its acquisition of Finalto, the financial trading arm of London Stock Exchange-listed Playtech.
Capital investment :
- Gopher investments: Acquisition of Finalto (September 2021)
- Bridge point: Minority investment in ACT Commodities Group (July 2021)
Asset managers:
- Quercus: Acquisition of Dom Inwestycyjny Xelion (November 2021)
Market appetite:
- Intermont: €101.3m Initial public offering of AIM Italia (October 2021)
- Hunt for peels: £112m AIM IPO (September 2021)
Seeking economies of scale and scope
Highlight of the case:
White & Case advised French Crédit Mutuel Arkéa on the sale of Keytrade Bank Luxembourg, the challenger bank for online trading, to Swissquote Bank.
Purchases:
- Alantra (France): Acquisition of a minority stake in Avolta Partners (April 2022)
- Swissquote (Luxembourg): Acquisition of Keytrade Bank Luxembourg (January 2022)
- Erste Group (Hungary): Acquisition of Random Capital (September 2021)
- Bank of Ireland (Ireland): Acquisition of Davy (July 2021)
- Santander (USA): Acquisition of Amherst Pierpont Securities (July 2021)
- BNP Paribas (France): Acquisition of the remaining 50% of Exane (July 2021)
JV:
- BNP Paribas Securities Services: Issuer services JV with CACEIS (March 2022)
Online trading/investing
Storage of growth capital:
- Actions: Successful US$40M Series A funding round led by Valar Ventures (March 2022)
- Main auction: Successful US$190m Series C funding round led by SoftBank Vision Fund II (February 2022)
- Moonfare: Successful US$125m Series C funding round led by Insight Partners (November 2021)
- Light year: Successful US$8.5m Series A funding round led by Mosaic Ventures (September 2021)
- Peaks: Successful €5 million equity investment by Haerlem Capital and Rithmeester (September 2021)
Purchases:
- Robin Hood: Acquisition of Ziglu (April 2022)
- JC Flowers: Acquisition of 30% of LMAX Group (July 2021)
Crypto trading
- Fun: Successful US$2.7m pre-seed funding round led by Global Founders Capital, Kingsway Capital, Kindred Capital and Karatage (June 2022)
- Relay : Successful €2 million crowdfunding round (May 2022)
- Elwood Technologies: Successful US$70m Series A funding round led by Dawn Capital and Goldman Sachs (May 2022)
- BVNK: Successful US$40m Series A funding round led by Tiger Global (May 2022)
- Coinhouse: Successful US$17M Series B Funding Round Led by True Global Ventures 4 Plus Fund (January 2022)
- GCEX: US$4 million equity investment from True Global Ventures 4 Plus fund (January 2022)
- Financial structure : Successful $20M Seed Funding Round Led by Polychain Capital (December 2021)
- BitOasis: Successful US$30 million Series B funding round led by Jump Capital and Wamda (October 2021)
- Coinrule: Successful $2.2m seed funding round led by Zilliqa Capital (September 2021)
- Bitpanda: Successful US$263m Series C funding round led by Valar Ventures (August 2021)
Digitization
- United fintech: Acquisition of 25% of Athena Systems (January 2022)
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