eToro to go public after $10.4bn merger with Betsy Cohen-backed SPAC

Multi-asset investing and trading platform eToro plans to go public through a merger with SPAC FinTech Acquisition Corp. V backed by Betsy Cohen, valuing the equity of the combined firm at around $10.4bn.

The companies are raising about $650m in equity to support the deal. Investors in the equity transaction include ION Investment Group, Softbank Vision Fund II, Third Point LLC, Fidelity Management & Research Co. and Wellington Management.

When the acquisition closes, “the combined company will operate as eToro Group Ltd. and is expected to be listed on Nasdaq,” it said.

eToro became a member of the US Financial Industry Regulatory Authority Inc last year and after it gets its approval, is expected to start providing stock-trading service in the second half of 2021.

“In the last few years, eToro has solidified its position as the leading online social trading platform outside the US, outlined its plans for the US market, and diversified its income streams. It is now at an inflection point of growth,” Cohen said.

Founded in 2007 by Yoni Assia, Ronen Assia and David Ring, eToro allows its 20 million registered users to invest in cryptocurrencies, stocks and commodities. In January 2021 the firm added 1.2 million new registered users to the network compared to a monthly average of 440,000 per month in 2020 and 192,000 in 2019.

Two years after its expansion in the US, eToro generated gross revenue of $605m, up by 147% from a year prior.

Similar to competitor Robinhood, eToro too offers commission-free trading. By using eToro’s platform, users can trade directly themselves or replicate the investment strategy of other investors on the platform at no extra cost. In addition, users can pick from a selection of stocks, currencies, commodities, cryptocurrencies and exchange-traded funds.

eToro’s network continues to grow and moreso after the recent rise of interest in consumer investment apps and services mainly resulting from Redditors trading GameStop stock in order to frustrate institutional short sellers.

It’s therefore easy to see how brokerages have seen a steep surge in retail investors since the past year, making up about 20% of US equity trading in 2020, according to Bloomberg.

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