Fintech M&A on the rise
M&A among global fintech companies has seen a sharp rise in the first half of 2022, according to research by financial advisory firm Hampleton Partners.
The firm’s latest fintech report recorded 591 deals in the first half of this year, a 15 per cent increase on the second half of 2021.
It is also a massive 68 per cent increase on pre-pandemic figures, when the firm recorded 348 fintech deals in the first half of 2019. This is despite a downturn in M&A activity globally.
Meanwhile, valuations remained broadly in line with the levels seen in the past two years.
The analysts highlighted that, unlike during the 2008 recession, deployable private capital reached its highest ever level at $3.6trn (£3.1trn), representing around three times that of 2008.
“The availability of capital drives buyers and investors to increase their acquisitions at a time when their pockets are full and high-growth fintech companies are being sold at all-time affordable prices”, the report stated.
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Of all the deals over first half of 2022, 36 per cent targeted the financial management solutions segment and 22 per cent related to payment solutions.
Wealth and capital markets tech fell to represent just 11 per cent of all deals, having been the most important subsector a few years ago, then accounting for one third of fintech M&A activity.
The crypto and blockchain industries saw a significant rise in the number of deals in the past 12 months, with a total of 107 transactions recorded, equating to 75 per cent growth year-on-year.
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“Despite record inflation, supply chain and geo-political risk, and concerns of a recession – or perhaps precisely because of these factors – deal-making in fintech has been particularly robust in 2022 thus far”, said Miro Parizek, principal partner at Hampleton Partners.
“We tracked nearly 600 acquisitions in the first half of 2022 – the highest volume for a six-month period on record.”
Parizek said analysts expect M&A levels to continue to rise because, as capital runs short, they will need to either seek VC investment, sell, or shutdown.
“At the same time, public companies with massive capital and PE with large amounts of dry powder, well financed late-stage high-growth private companies, and traditional financial services companies who look to remain relevant, are on the lookout for good assets in the sector”, he added.
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