Hampleton Partners Report: M & A activity cools off in the second half of the year / UK continues to lead Fintech in the second half of the year. Fintech global VC investment reached $ 31 billion in 2018, compared to $ 15 billion in 2017. 189 transactions and nearly $ 50 billion in the first half compared to 160 transactions with a reported value of $ 13 billion in the second half of 2018
The recent fintech M & A market report by international tech M & A advisor Hampleton Partners shows that in 2018, with a reported $ 30.8 billion, the highest ever investment in fintech start-ups has been recorded. As fintech start-ups mature, the average financing round has doubled compared to 2017.
The $ 50 billion exceptional finite-tech transaction value from 189 transactions generated in the first half of 2018 could not be replicated in the second half of the year. Here, the activities weakened with 160 transactions and a reported transaction value of just under 13 billion USD. The drop is mainly due to the lack of large blockbuster deals disclosed. The first half of the year saw the $ 17 billion acquisition of Thomson Reuters by Blackrock.
The 30-month median-based trailing multipliers continued their upward movement: revenue multiples reached 3.0x, up from 2.9x in the first half of 2019, while EBITDA multiples reached 15.3x, up from 15.0x in the first half of 2018.
Trends in the fintech industry
The introduction of biometric technologies is becoming increasingly popular among consumers, such as smartphone fingerprint authentication and face recognition for payments.
Although artificial intelligence continues to be promising and companies are using algorithms and advanced modeling techniques for investment decisions, this change is more like a step-by-step process than a quantum leap.
Successful companies in the fintech sector are created primarily at a regional rather than a global level; Similar to the traditional private customer business with its different business and regulatory conditions.
Britain is a leader in Europe, bringing forth a new generation of innovators with record investment in 2018. But despite these startups, which are gaining a growing market share, even the largest British fintech companies are being overshadowed by the American companies Stripe, Robinhood and SoFi. These in turn are outperformed by the Chinese Ant Financial, which was recently estimated at $ 150 billion.
As financing becomes increasingly selective, the review of business fundamentals is increasing.
Fintech in the analysis
Jonathan Simnett, Fintech Specialist and Director at Hampleton Partners, analyzes fintech year 2018: “In the second half of 2018, the UK continued to lead Fintech in Europe, bringing forth a new generation of innovators with record investments, followed by new unicorns such as Monzo and revolts.
Looking at the use of fintech, the private customer business has played a leading role in improving the digital customer experience and also integrated fintech into the core products of the banking business. Investment banks, on the other hand, have focused more on integrating Robo advisory services. ”
Jonathan Simnett also took a look at the coming months: “It is expected that the largest fintech companies will soon realize value through an IPO in 2019. In addition, many start-ups will now be big enough to gain momentum, attract a strong customer base, and build a profitable bottom line. At the same time, they remain small enough to be acquired by fintech and traditional established companies. This leads to a continuous consolidation and M & A process. “
Also published on Medium.