Payments processing is the engine driving the financial technology venture market, with three mega-transactions accounting for $87 billion in deal value during the first half of 2019.
The top three transactions - Fidelity National Information Services acquisition of Worldpay for $43.6bn, Fiserv's $22 billion First Data deal, and Global Payments $21.2 billion buy out of Total System Services - were responsible for more than half of a record-breaking $120 billion in disclosed transaction value in H1.
In its latest global Fintech M&A Market Report, corporate finance boutique Hampleton Partners points to a revitalised M&A market since the slump in 2H2018, as well as an overall trend for larger deal sizes: 65% of deals exceeded $100 million in the first half of 2019, compared to only 54% in 2018.
Jonathan Simnett, director and fintech specialist, Hampleton Partners, says: “The fintech M&A market is white-hot in Europe and North America. Financial businesses and institutions are increasingly open to adopting large-scale fintech in transaction processing or enterprise financial software, and as the financial services industry re-structures, competition for game-changing assets is increasing.”
Excluding the three mega-deals in payments processing, enterprise financial software remained the largest fintech sub-sector, with over 75% of remaining disclosed deal value and just under 50% of all deal volume - 98 deals.
Significant deals in enterprise financial software included Thoma Bravo’s acquisition of Ellie Mae, a provider of mortgage loan origination, for $3.7 billion, making it the fourth largest transaction of 1H2019, at 7.5x EV/S.
Alongside the M&A action, fundraising in fintech continues its record-breaking course. With 818 fundraises so far in 2019, the anticipated annualised figure of 1,636 would set a new annual record, narrowly beating those figures recorded in 2017 (1,632) and in 2016 (1,633).
Simnett concludes: “The heat is being applied to fundraising, auguring well for future large-scale fintech exits. 2Q2019 proved to be the largest quarter ever for fintech fundraising, with Europe already exceeding its 2018 annual record. As Europe and North America power ahead of the currently moribund Asian fintech fundraising market, we expect this to yield several large-scale fintech M&A transactions in the future.”