6 of the biggest FinTech acquisitions in H1 2023

6 of the biggest FinTech acquisitions in H1 2023

As we enter the second half of the year, FinTech Global has highlighted some of the biggest acquisition deals of the year.

As the financial crisis continues to grip much of the world, it has been tough for startups and established firms to hold their footings. The first six months of 2023 has had its fair share of shocks. Chief among these was the collapse of Silicon Valley Bank (SVB), which became the largest bank to collapse since 2008 and its aftermath caused the closure of Signature Bank. The UK branch of Silicon Valley Bank was later purchased by HSBC for £1.

This wasn’t the only high-profile financial institution to hit troubled water. Financial Services major UBS acquired rival bank Credit Suisse in a $3.25bn deal to help prevent a banking crash.

Not only have companies been forced to close, but there has been a drop in dealmaking. While there have been some sizable acquisition deals in 2023, there are still signs of a tough year. There were 130 acquisitions and buyouts during the first quarter, totalling $4bn in value, according to data from Dealroom. This represents a 55% year-over-year decline in deal value and 42% drop in deal volume. A similar decline has been noted in the fundraising market. A total of $27.3bn was raised across 1,714 deals in H1 2023, a significant drop from H2 2022, which saw $31.7bn raised through 2,500 deals, according to new research by Innovate Finance.

However, it is not all doom and gloom. As shown in this list, the FinTech sector is still prime for deal and funding activity, with some major deals still closing.

While this article will focus on the FinTech space, it is worth noting two significant acquisitions within the insurance industry. RenaissanceRe, a prominent figure in the reinsurance market, will acquire the reinsurer Validus Re, along with AlphaCat and the Talbot Treaty reinsurance business, for a total deal value of $4.5bn.

American International Group (AIG), a global insurance behemoth headquartered in the US, decided to sell Validus Re to further streamline its business model and reduce portfolio volatility. The sale, pegged at $2.985bn in cash and common shares of RenaissanceRe, is expected to provide AIG with considerable liquidity and capital efficiencies. With the inclusion of future capital synergies of about $400m and excess capital over shareholders’ equity of Validus Re, the total transaction value is anticipated to exceed $4.5bn.

Liberty Mutual Insurance, a global provider of various insurance products and services, recently confirmed a definitive agreement to sell its Madrid-headquartered personal lines and small commercial insurance business, Liberty Seguros, S.A., to Generali Group. The $2.5bn (€2.3bn) deal also encompasses Liberty Seguros’ operations in Ireland, Northern Ireland, Portugal, and Spain, but does not include Liberty Mutual’s other European enterprises such as Liberty Specialty Markets, Liberty Mutual Reinsurance, Liberty Mutual Surety, Liberty IT, and Hughes Insurance.

Without further ado, here are six of the biggest FinTech acquisitions of the year.

Nasdaq to buy risk management technology platform Adenza for $10.5 billion

Last month Nasdaq agreed to acquire Adenza, which offers end-to-end trading, treasury, risk management and regulatory compliance solutions, from Thoma Bravo in a deal worth $10.5bn, according to Reuters. As part of the deal, Thoma Bravo gets a 14.9% stake in Nasdaq.

This deal, which is reportedly the biggest completed by Nasdaq, aims to help it expand its FinTech footprint and diversify itself beyond serving as an exchange operator.

Adenza was founded in 2021 following the merger of Calypso Technologies with AxiomSL by Thoma Bravo. Its revenue is projected to be $590m for the year. The company helps capital markets accelerate their digital transformation through greater efficiency, compliance and lower complexity and costs.  Its software can consolidate and simplify internal processes from front to back, integrate data management and reporting, and allow the whole organisation to operate at speed.

However, investors were not too keen on the deal. Shares in Nasdaq dropped by more than 10% to a nearly one-year low, as investors saw the deal as an expensive bet. Michael Miller, an analyst at Morningstar told Reuters there are serious reservations about the price Nasdaq paid for Adenza. The deal is nearly 18-times the expected 2023 revenue of Adenza.

In response to the fears, Nasdaq CEO Adena Friedman stated that as Adenza is a bit of an unknown asset, it will take time for investors to digest the details. She said, “We think we paid an appropriate price for an exceptional asset, but helping people understand how exceptional the opportunity is, I think, is going to take some time.”

Following regulatory approval of the deal, Nasdaq plans to issue $5.9bn in new debt to boost the company’s leverage, it said. It hopes this will reduce the financial risk profile and Nasdaq will then look to lower debt levels within 18 months.

Duck Creek acquires Vista Equity Partners for $2.6bn

Duck Creek Technologies, an intelligent solutions provider looking to define the future of property and casualty (P&C) insurance, has completed its acquisition of global investment firm Vista Equity Partners.

Vista is a global investment firm with more than $95bn in assets under management as of September 30, 2022. The firm exclusively invests in enterprise software, data and technology-enabled organisations across private equity, permanent capital, credit and public equity strategies.

Duck Creek Claims is a comprehensive claims management solution that aims to help insurers manage the entire claims lifecycle.

The transaction was valued at approximately $2.6bn.

With the completion of the transaction, Duck Creek Technologies shares have ceased trading and are no longer listed on the Nasdaq Global Select Market.

J.P. Morgan acted as financial advisor to Duck Creek, and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal counsel to Duck Creek.

Michael Jackowski, chief executive officer of Duck Creek, said, “We are excited to commence our partnership with Vista Equity Partners and work together to advance the next generation of P&C insurance technology.

“With Vista’s global network and deep sector expertise, we will be better positioned to support and accelerate the industry’s transition to the cloud while continuing to deliver a best-in-class customer experience.”

Monti Saroya, senior managing director and co-head of Vista’s Flagship Fund, added, “Duck Creek is a demonstrated leader in the P&C space, delivering innovative solutions that empower carriers to be faster and more nimble in servicing the digital needs of their customers. We look forward to partnering with Mike and the Duck Creek team as they continue to scale and define the future of P&C insurance technology.”

Francisco Partners acquires SaaS analytics platform Sumo Logic

Francisco Partners, a global investment firm, has acquired SaaS analytics platform Sumo Logic in a deal that values the business at $1.7bn.

Shareholders will receive $12.05 per share in cash. This represents a premium of around 57% to Sumo Logic’s unaffected closing stock price on January 20, the last full trading day prior to media reports about the potential transaction.

Following the close of the deal, Sumo Logic will become a private company.

Through the support of its new investor, it hopes to expand its market opportunity, bolster innovation of its solutions, accelerate growth and pursue its ‘vision’.

Founded in 2020, Sumo Logic is a SaaS analytics platform that enables clients to implement reliable and secure cloud applications.

Its Sumo Logic Continuous Intelligence Platform enables developers and practitioners to protect their systems from security threats, as well as get insights about their cloud infrastructure.

Clients leveraging Sumo Logic access real-time analytics and insights for cloud-native applications.

In a joint statement, Brian Decker and Evan Daar – partners at Francisco Partners – said, “Sumo Logic is ideally positioned to capitalise on the large and growing demand from enterprises for observability and security solutions.

“Its leading, cloud-native, analytics platform provides the scalability and insights required as applications and data proliferate in today’s digital world. We look forward to partnering with Sumo Logic to drive accelerated growth and continue its long heritage of product innovation.”

This is the second deal to be completed by Francisco Partners this week. It recently made a strategic growth investment into cloud-based payroll provider GreenSlate.

The payroll company offers remote, paperless and contact-free workflows, allowing companies to streamline operations and reduce their environmental impact.

Databricks acquires MosaicML in $1.3bn deal to democratise generative AI

Databricks, a pioneering unified data and AI platform, has penned a definitive agreement to acquire MosaicML, a renowned GenAI platform.

The intention behind the acquisition, valued at an approximate $1.3bn, inclusive of retention packages, is to democratise access to generative AI for organisations globally.

Databricks’ main offering is its Lakehouse Platform, a unified data and AI platform that offers organisations a secure and efficient way to manage their valuable data. On the other hand, MosaicML is celebrated for its state-of-the-art large language models (LLMs) like MPT-7B and MPT-30B, which have collectively achieved over 3.3 million downloads. MosaicML’s models offer organisations an economical method to rapidly build and train their own state-of-the-art models using their data.

The collaboration between the two firms aims to enable every organisation to build, own and secure their own generative AI models with their own data. Notable MosaicML customers, including AI2 (Allen Institute for AI), Generally Intelligent, Hippocratic AI, Replit and Scatter Labs, have already harnessed MosaicML’s platform for a range of generative AI uses.

According to MosaicML, their automatic model training optimisation provides a 2x-7x faster training experience compared to standard approaches. Once combined with Databricks’ technology, this will allow multi-billion-parameter models to be trained in hours instead of days, and at thousands of dollars instead of millions.

Following the acquisition, MosaicML’s entire team, including its machine learning and neural network specialists, are expected to join Databricks. MosaicML’s platform will be integrated with Databricks’ technology over time to offer customers a seamless, unified platform for building, owning and securing their generative AI models.

Databricks CEO, Ali Ghodsi, said, “Every organisation should be able to benefit from the AI revolution with more control over how their data is used. Databricks and MosaicML have an incredible opportunity to democratise AI and make the Lakehouse the best place to build generative AI and LLMs.”

Echoing the sentiment, Naveen Rao, CEO of MosaicML, stated, “At MosaicML, we believe in a world where everyone is empowered to build and train their own models, imbued with their own opinions and viewpoints — and joining forces with Databricks will help us make that belief a reality.”

Visa plans $1bn acquisition of Pismo to expand core banking and issuer solutions

Visa, a global leader in digital payments, has signed a definitive agreement to acquire Pismo, an operational cloud-native issuer processing and core banking platform in Latin America, Asia Pacific, and Europe.

The deal, which totals $1bn in cash, will bolster Visa’s ability to serve its clients in the fintech and financial institution sectors.

The acquisition aims to equip Visa with Pismo’s core banking and issuer processing capabilities across a range of payment types including debit, prepaid, credit, and commercial cards. The platform will be accessible to clients via cloud native APIs. Furthermore, Pismo’s system will empower Visa to offer support and connectivity for emerging payment rails, such as Pix in Brazil.

Pismo, a technology company with extensive experience developing and implementing banking and card solutions, caters to both digital banks and large financial institutions. The company has a broad geographical reach, with operations spanning Latin America, Southeast Asia, and Europe. Its notable investors comprise Redpoint eventures, Softbank, Amazon, and Accel.

The acquisition signifies a significant strategic move for Visa. As Jack Forestell, chief product and strategy officer at Visa said, “Through the acquisition of Pismo, Visa can better serve our financial institution and fintech clients with more differentiated core banking and issuer solutions they can offer their customers.” Pismo’s CEO, Ricardo Josua, echoed this sentiment, stating, “Visa provides us unrivalled support to expand our footprint globally and help shape a new era for banking and payments.”

As part of the agreement, Pismo will retain its existing management team. Completion of the transaction is subject to regulatory approvals and other customary closing conditions and is expected by the end of 2023.

Turkish neobank Papara swallows Rebellion, emerging as Europe’s newest FinTech unicorn

Papara, the leading Turkish neobank, announced its acquisition of Rebellion, a popular Spanish challenger bank. This major acquisition, the first of its kind for Papara, propels the company’s valuation to over $1bn, elevating it into the coveted ranks of FinTech unicorns in Europe.

The strategic purchase of Rebellion is part of Papara’s ambitious global expansion strategy. It gives the Turkish neobank an instant presence outside its home market for the first time, with a clear intent to drive forward its mission of financial inclusion for all. The transaction, a multi-million dollar deal involving both cash and stock, has been brokered with Rebellion’s current owners, Beka Finance.

Based in Turkey, Papara has established itself as a comprehensive financial SuperApp, offering a wide array of services like instant and free transfers for consumers, bill payments, foreign currency transfers, and tracking spending habits. Additionally, it caters to businesses by facilitating mass payments, providing a customisable corporate card, and enabling a secure check-out option for merchants.

Rebellion, headquartered in Madrid, is one of Spain’s top-rated financial apps. It has built a strong reputation for offering services similar to Papara’s, such as money transfers, prepaid cards, and cashback options, all aimed at fostering financial independence among its users.

As part of the acquisition, Rebellion will undergo a rebranding exercise to become Papara Spain. The existing Rebellion staff will join the expanding Papara team, contributing to the mission of promoting financial inclusion. This acquisition represents a key entry point for Papara into the rapidly growing Spanish banking market, a hub for digital and technological innovation.

“Papara was founded on the principle of financial inclusion for all, and this deal will allow us to ensure that is reality for even more people. 2023 is the year in which we are beginning to execute our ambitious international growth strategy, and we are confident that Rebellion is the perfect foundation upon which to expand our global reach,” Papara founder and chairman Ahmed Karslı said.

Adding to this, Rebellion co-founder Sergio Cerro commented, “This acquisition presents an exceptional opportunity to propel a project that aligns seamlessly with the Spanish neobanking market. Given the absence of a dominant player in the Spanish sector, and considering the prevailing economic landscape, I strongly believe that Papara is the ideal partner to synergistically blend resources, business vision, and ambition.”

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