2022 Predictions
FinTech Maps, Funding, and M&A activities
Thank you for the FinTech maps you sent me this week!
I received an overwhelming response after my call for more maps to build up my overview regional articles (Europe, APAC, LATAM, and Africa).
We now have new and updated maps from Singapore, Hong Kong, The Philippines, Costa Rica, Dominican Republic, Guatemala, Honduras, The Netherlands, and many more.
I already shared a few on LinkedIn this week and will share some more new maps in the upcoming weeks. So stay tuned!
Fresh Funding For All
👉 In my predictions for 2022, I specifically mentioned the business banking space to blow up. And the first weeks of the year did not disappoint at all.
There was fresh funding for Qonto, Koinworks, Novo, Brex, and some interesting early-stage deals for Upbanx and Crowdo. Believe me when I say that these won’t be the last deals we’ll see in the upcoming year. 👀 Watch this space!
As I also mentioned in my 2022 predictions, I expect more and more Fintech M&A deals.
One of the notable acquisitions that stood out in 2021 was the Square-Afterpay deal. On that note, I’d like to share with you a great post I stumbled across on LinkedIn by Letter of Intent, that gives a succinct summary of the events:
Square's $39bn acquisition of Afterpay was the largest announced deal in Australian history.
👇 Here’s the play-by-play of just how that deal came about:
𝐏𝐭 𝐈: 𝐓𝐡𝐞 𝐂𝐨𝐮𝐫𝐭𝐬𝐡𝐢𝐩
As any good strategic M&A deal often starts, Square and Afterpay first met in late 2019 to talk partnerships.
But it wasn't until December 2020 that the idea of a merger was first kicked around.
It made sense.
Both were much-loved brands, serving retail customers and merchants, driving a global fintech revolution.
But just as those conversations got serious, Afterpay received another offer.
On March 25 a “large, well-capitalised strategic party” expressed interest – many believe it was Paypal.
And while that party ultimately faded, it lit a fire under Square and on May 18 they asked to look at Afterpay’s books.
So the troops were called in.
Square engaged Morgan Stanley, King & Wood Mallesons and Wachtell, Lipton, Rosen & Katz.
Afterpay called in Goldman Sachs, Qatalyst Partners, Gilbert + Tobin and Cravath, Swaine & Moore LLP + Afterpay's Board engaged Highbury Partnership.
𝐏𝐭 𝐈𝐈: 𝐓𝐡𝐞 𝐍𝐞𝐠𝐨𝐭𝐢𝐚𝐭𝐢𝐨𝐧
On July 9 – after 6 weeks of DD – Square made an offer.
• 0.420 Square shares for each Afterpay share – implying ~$137/share or $41bn.
But Eisen/Molnar wanted more.
Just 4 months earlier their shares were trading above $150. So they countered and kicked off a volley of bids...
• Eisen/Molnar countered with a 0.480 ratio (~$155/share).
• Square raised it to 0.435 (~$140/share).
• Eisen/Molnar then made their “best and final” a 0.445 ratio (~$145/share).
On July 13 Square agreed.
𝐏𝐭 𝐈𝐈𝐈: 𝐓𝐡𝐞 𝐑𝐞𝐧𝐞𝐠𝐨𝐭𝐢𝐚𝐭𝐢𝐨𝐧
But at around the same time, Apple made a surprise announcement.
They were getting into the BNPL game in partnership with Goldman Sachs – Afterpay’s M&A adviser
Afterpay's shares were hit hard.
By July 29 its shares fell from $118 to $99, while Square’s actually rose 7%.
The agreed ratio now implied ~$155/share for Afterpay – a massive 50%+ premium!
So Square met with Eisen/Molnar via Zoom on July 29. They wanted to renegotiate and they had all the leverage.
Already the behemoth and empowered by the Afterpay sell-off, Square presented a revised “best and final” offer.
• 0.375 Square shares for every Afterpay share.
It implied ~$130/share – a $7.5bn hit vs. the agreed ratio, and even less than Square’s very first offer.
But the renegotiation would have come as no surprise.
The Apple threat had rocked all of the standalone BNPL players. Paypal had also entered Afterpay's home market in Australia + CBA, Affirm, and others were all making plays too.
Over a frantic weekend of management/advisor/Board calls – Afterpay agreed.
So on Monday, Aug 2 at 7:30 am AEST the largest ever Australian acquisition was announced.
And while today the global tech sell-off has pushed Square's share price lower and meant the $39bn sits closer to $25bn it's a remarkable outcome for a company founded just 7 years ago!
Source: Letter of Intent → Follow this account, and sign up for their newsletter, for more great news.
As I mentioned before, I expect a lot more M&A deals in FinTech in 2022 and I’ll try to bring you more behind-the-scenes stories like this one. So stay tuned!
👉 Also, if you are thinking of selling your FinTech company or are looking for acquisition targets to boost your growth, let me know, so I can help you out!
Through my experience and network in the FinTech space, I have a clear overview of buyers and sellers in the market in order to connect some dots 😉.
Enjoy your Sunday and talk soon!
Cheers,
Marcel.