Back
Financial institutions M&A: Sector trends - September 2021
vault
Insight

Financial institutions M&A: Payments

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

  • Si...zzz...ling hot!

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

Stratospheric 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

 

FULL MAGAZINE
Financial institutions M&A: Sector trends

 

This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.
© 2021 White & Case LLP