According to KPMG’s Pulse of Fintech report, fintech VC activity in Europe has hit a historically high level for successive quarters. In Q1 2017, global investment in fintech companies hit $3.2bn across 260 deals. Q1 2017’s total capital invested soared to $610m, which was noted as the highest tally in years.
VC investment in fintech remains high, with transaction volume also remaining healthy. Murray Raisbeck, who presented the KPMG report findings at Money 20/20 Europe, stated that stated that while VC investment in Europe had hit new records, the US still ahead of VC investments for the year.
According to the report, in Q1 2017, US fintech companies received investments of $1.5bn across 124 deals. In the same period, investment in fintech companies in Europe hit $880m across 89 deals.
While the US has been dominating the VC market in the West, traditional fintech institutions are emerging from contrasting markets around the world. Canada, for example, saw a growth in fintech investments in Q1 2017, where companies such as the Bank of Montreal introduced a robo-advisory service. KPMG predicts that investment in fintech will likely grow in the region, particularly around AI and machine learning.
VC’s have also earmarked Brazil as an emerging fintech hub. Fintech in Brazil is markedly different to that in the US, as there is less of a focus on customers and more focus on increasing efficiencies in the value chain of financial services, and reducing financial exclusion.
There is an equal focus on developing fintech to provide financial services to the unbanked and underbanked across markets such as Mexico and additional geographies of Latin America. The focus in these areas is based around payments, international transfers, mobile wallets and P2P lending.
Here are some of the most significant fintech acquisitions of 2017:
Broadridge Financial Solutions acquires Message Automation: Amount undisclosed
Broadridge Financial Solutions announced in March that it had acquired Message Automation, a leading provider of post-trade control solutions. The company was acquired for an undisclosed amount.
Tom Carey, President, Global Technology and Operations International, EMEA and APAC, Global Fixed Income, Broadridge Financial Solutions commented on the acquisition: “The acquisition of Message Automation extends our ability to enable firms to accurately meet their regulatory trade and transaction reporting obligations and other post-trade processing challenges. Message Automation’s solutions directly address the challenges of data fragmentation in firms and also deliver market connectivity standards. This has enabled its clients, many of which are global firms, to reduce risk and demonstrate compliance. This has been achieved through an advanced control framework, leveraging innovative technology that offers the flexibility to accommodate new regulations as they emerge and allows the reuse of existing data.
“We are very excited to broaden our overall client value proposition though this investment, which combines both best-in-class solutions and a highly talented, client-centric team with deepest domain knowledge and an outstanding reputation for technology innovation and high-quality service.”
First Data acquires CardConnect for $750m
First Data acquired payment processor CardConnect for a reported $750m. CardConnect is an innovative provider of payment processing technology, and already one of First Data’s largest distribution partners. It processes approximately $26bn of volume annually from around 67,000 merchants.
“This transaction is consistent with our strategy of integrating and scaling innovative technologies across our distribution footprint to better serve our partners and customers,” said First Data Chairman and CEO, Frank Bisignano.
“CardConnect is a long-standing First Data distribution partner and we are excited to incorporate their state-of-the-art solutions across some of our most important strategic initiatives such as partner-centric distribution, integrated payments, and enterprise payments solutions.”
AntFinancial buys MoneyGram for $1.2bn
In January, AntFinancial put forward a $880m bid for the acquisition of MoneyGram. Following a counter bid from payments company Euronet, AntFinancial increased its offer to $18 per share, totalling to $1.2bn for the US cross-border payments service.
It now appears as though AntFinancial has won the bidding-war battle with Euronet to acquire MoneyGram. Both parties anticipate the deal will be closed later this year.
“Over the past few months, we have enjoyed working closely with the MoneyGram team and remain committed to our plans to invest further in the MoneyGram business,” said Ant Financial International President Doug Feagin in a statement.
“We plan to grow the US-based team and create even greater opportunities for the MoneyGram community as we pursue our shared vision of global inclusive finance in an increasingly digital era.”
Paypal acquires TIO Networks for $233m
PayPal has acquired payment management company TIO Networks for a reported $233m. The Vancouver based processing company has around 14 million users throughout 65,000 locations, and processed over $7bn in bill payments last year.
The acquisition moves PayPal one step closer to compete with big league banks and offer greater financial services.
“Worldwide, more than two billion people do not have affordable access to basic financial services, making it difficult and expensive for consumers to carry out basic financial tasks, including bill payment. TIO’s digital platform, and physical network of agent locations make paying bills simpler, faster, and more affordable,” said PayPal CEO Dan Schulman.
“By acquiring TIO and integrating bill payment into our global payments platform, PayPal adds another key service in our efforts to become a part of a consumer’s everyday financial life.”
D+H and Misys merge in $4.8bn acquisition and form Finastra
Recognised as the fintech ‘super-merger’ of 2017, in march this year Vista Equity Partners struck an agreement to purchase Canadian financial solutions software supplier D+H for $4.8bn.
“We are thrilled by the prospect of combining these two leaders in the fintech industry,” Brian N. Sheth, Co-Founder and President of Vista Equity Partners, told the press on announcing the news.
“D+H is an outstanding company with impressive talent and deep experience providing technology solutions to financial institutions worldwide. Over the last five years we have worked closely with the Misys management team to transform and grow its global business and this is a great next step in that process. Together, Misys and D+H have the promise to shape and lead the future of financial software.”
The union of both companies has officially re-launched as Finastra, creating the third-largest fintech company in the world. Finastra has around 10,000 employees and over 9,000 customers across 130 countries, including 48 of the top 50 banks globally.
Mastercard closes acquisition of Vocalink for $920m
Mastercard has won the approval from the UK’s Competition and Markets Authority to clear the way to acquire payments systems company Vocalink for $920m. Mastercard initially announced the acquisition in July 2016, and earlier this year the bid was approved. Vocalink’s technology powers immediate payments in the world’s largest financial markets.
In the UK, Vocalink processes over 90% of salaries, more than 70% of household bills and almost all state benefits.
Worldpay agrees to $10bn acquisition by Vintav
Payments company Worldpay has confirmed a $10bn acquisition offer by card processing company Vantiv. The acquisition includes Vantiv paying $3.85m per Worldpay share, however, the final amount is subject to share prices when the deal closes.
“The board members of Worldpay and Vantiv see compelling strategic, commercial and financial rationale for combining Worldpay and Vantiv’s complementary businesses,” WorldPay noted in a statement.
“The potential merger creates a scale world class payments group in a dynamic market, with deep payments capabilities, product and vertical expertise and strong distribution channels to serve merchants around the world in the global e-commerce market, and in-store and online in the UK and US markets.”
Klarna acquires Billpay for $75m
Swedish fintech unicorn Klarna announced earlier this year that it would be acquiring BillPay, a German payments company. It is believed that the company will be paying $75m to BillPay’s previous owner, UK lender Wonga.
Sebastian Siemiatkowski, co-founder and CEO of Klarna, says Germany is “one of the largest e-commerce markets in the world”.
Klarna works with 65,000 merchants and 45 million consumers in 18 countries in Europe and North America. It has 1,500 employees.