By Gloria Methri
The FinTech sector has seen a slowdown in deal activity as companies around the world take a cautious approach to mergers and acquisitions (M&A). In the first half of 2023, only 128 M&A deals were recorded, compared to 248 and 188 in the first and second half of 2022.
Despite the contraction, companies remain interested in exploring options and are looking forward to closing potential deals when market conditions improve. According to S&P Global Market Intelligence, several FinTech segments are attracting M&A interest, including payments, treasury management software and corporate spinoffs.
To get a sense of this year’s FinTech M&A landscape, here’s a list of the ten biggest FinTech M&A deals in 2023.
FIS, a global financial services technology company, has signed an agreement to sell a majority stake in its Worldpay Merchant Solutions business to private equity funds managed by GTCR in a transaction valued at $18.5 billion.
The agreement will enable improved management and operational simplification for FIS and Worldpay. In addition, the upfront cash will create immediate flexibility in capital allocation. As part of the agreement, GTCR has committed an additional capital investment in Worldpay of up to $1.25 billion to pursue inorganic growth opportunities.
Last month, Nasdaq completed its acquisition of software company Adenza, owned by Thoma Bravo, for $10.5 billion, the exchange operator’s largest acquisition to date. As part of the deal, Thoma Bravo received a 14.9% stake in Nasdaq. The deal is intended to help it expand its fintech footprint and diversify beyond its role as an exchange operator.
Adenza was founded in 2021 following the merger of Calypso Technologies with AxiomSL by Thoma Bravo. Nasdaq expects to achieve $80 million in annual net expense synergies by the end of the second year following the acquisition and $100 million in long-term revenue synergies.
In October, German stock exchange operator Deutsche Börse successfully acquired Danish investment management software SimCorp, in a deal valuing the company at €3.9 billion. SimCorp offers an end-to-end investment management platform and ecosystem used by the world’s largest asset owners and managers.
The combination of SimCorp’s commercial offering with Deutsche Börse’s data and analytics businesses will create a comprehensive end-to-end investment management solutions platform. This will enable the German company to better capitalize on secular industry trends and diversify its business mix with a growing share of recurring revenues.
- Duck Creek Technologies Acquires Vista for $2.6 Billion
The largest FinTech M&A transaction in Q1 2023 was between Duck Creek Technologies and Vista. In January, InsurTech Duck Creek Technologies entered into a definitive agreement to be acquired by global investment firm Vista Equity Partners in an all-cash transaction valued at approximately $2.6 billion.
The purchase price of $19 per share for Duck Creek Technologies represented a 46% premium to its closing stock price on January 6, 2023. The acquisition by Vista Equity Partners was aimed at strengthening the company’s market position.
- Francisco Partners Acquires Sumo Logic for $1.7 Billion
Global investment firm Francisco Partners has acquired SaaS analytics platform Sumo Logic in a deal that values the company at $1.7 billion. Following the deal’s closing in May, Sumo Logic became a private company. Founded in 2020, Sumo Logic is a SaaS analytics platform that enables customers to implement reliable and secure cloud applications.
In February, Canadian fintech Nuvei completed its acquisition of payments platform Paya Holdings for $1.3 billion. Paya is a U.S.-based provider of integrated payments and frictionless commerce solutions that processed $50 billion in annual payment volume last year, primarily in high-growth verticals such as healthcare, nonprofits, government, utilities and other business-to-business (“B2B”) end markets.
Paya amplifies Nuvei’s existing growth strategy and extends its reach into new, under-penetrated and non-cyclical verticals where Nuvei’s proprietary technology aims to accelerate customer growth.
In June of this year, Visa agreed to acquire Pismo, a cloud-native issuer and central bank processing platform with operations in Latin America, Asia Pacific and Europe, for $1 billion in cash.
By acquiring Pismo, Visa said it will be able to provide core banking and issuer processing capabilities for debit, prepaid, credit and commercial cards to customers via cloud-native APIs. Pismo’s platform will also enable Visa to provide support and connectivity for emerging payment rails, such as Pix in Brazil, for financial institution customers.
Rapyd, a global Fintech-as-a-Service provider, has acquired PayU Global Payment Organisation (GPO) for a total cash consideration of $610 million. PayU GPO is the payments and FinTech arm of Prosus, a global consumer internet group based in the Netherlands and one of the world’s largest technology investors.
Rapyd is a digital payment processing and infrastructure company that offers end-to-end products across the entire payments spectrum. The acquisition was aimed at helping Rapyd significantly expand in Central and Eastern Europe and Latin America.
Turkish neobank Papara has announced the acquisition of Spanish bank Rebellion. This major acquisition, the first of its kind for Papara, has propelled the company’s valuation to over $1 billion, making it one of Europe’s fintech unicorns.
The strategic acquisition of Rebellion is part of Papara’s ambitious global expansion strategy. The neobank said the deal gives the company an immediate presence outside its home market for the first time. The multi-million dollar transaction involving both cash and stock was negotiated with Rebellion’s current owners, Beka Finance.
- SimCorp Merges with Axioma
Last month, SimCorp announced its merger with Axioma, a global provider of factor risk models, portfolio construction tools and multi-asset class enterprise risk solutions.
Prior to the merger with SimCorp, Axioma was part of Qontigo, a subsidiary of Deutsche Börse Group since 2019 and a strategic partner of SimCorp since 2021. SimCorp serves as the technology backbone for over 300 of the world’s largest financial institutions, while Axioma’s solutions are used by over 380 investment managers worldwide, with a primary client base in North America.
Also read: Global Transaction Banking Vendors and Landscape Report Q1 2024