Apex Clearing Chooses SPAC to Go Public

Apex Clearing Holdings, a digital clearing and custody engine, announced formal plans to publicly list on the New York Stock Exchange under the ticker “APX.”

The Texas-based company is eschewing the traditional IPO route to a public launch, and instead pursuing the listing via a merger with Northern Star Investment Corporation, a special purpose acquisition company (SPAC). The deal values Apex at $4.7 billion.

Apex is the sixth fintech to use a SPAC to go public in the past few months, joining SoFi, BankMobile, Payoneer, MoneyLion, and OppFi.

“We are in the first inning of the digital revolution in financial services, and our merger with Northern Star will provide Apex with the resources and flexibility to accelerate our growth, scale our platform, and expand our offerings and market share alongside our clients,” said Apex Clearing CEO William Capuzzi.

Capuzzi, along with Apex President Tricia Rothschild, will continue to serve the company in their current roles. Northern Star Chairwoman and CEO Joanna Coles will join the combined company’s Board of Directors.

Apex was founded in 2012 and helps online brokerages, traditional wealth managers, wealthtechs, professional traders, and consumer brands with account opening and funding, execution of trades, digital asset movements, trade settlement, and the safekeeping of customer assets.

Apex has provided custody for $14 billion in new assets year-to-date and currently serves 200+ clients representing more than 13 million customer accounts. The company has already recorded impressive growth so far this year, seeing 3.2 million customer accounts and more than one million new crypto accounts opened in the past two months.

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Moody’s to Acquire Cortera

Data analytics firm Moody’s announced plans to acquire data insights company Cortera this week. Terms of the deal, which is expected to close in the first quarter of this year, are undisclosed.

Moody’s anticipates the purchase will enhance its risk assessment capabilities. The move will also significantly extend Moody’s coverage in the SME market– the segment that serves as Cortera’s focus.

“Cortera plays an important role in helping businesses understand each other,” said President of Moody’s Analytics Stephen Tulenko. “Our customers will be able to leverage Cortera’s extensive information on small businesses with Moody’s proprietary analytic tools to make better decisions.”

Cortera was founded in 1993 and provides credit data and workflow solutions on North America-based public and private organizations. The Florida-based company maintains a database of credit information on more than 36 million businesses across the continent.

Cortera sources this data from thousands of resources and scrubs it using AI. As a result, the company is able to provide analytics, reports, and monitoring services to help inform businesses’ decisions.

Specifically, the acquisition will augment Moody’s Orbis database of private company information and enhance its KYC, commercial lending, and supply chain solutions.

Moody’s was founded in 1900 and provides data, analytical solutions, and insights to help businesses identify opportunities and manage risk. The company employs more than 11,000 people across 40+ countries. Headquartered in New York City, Moody’s is publicly traded on the NYSE under the ticker MCO. The company has a market capitalization of $52 billion.

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NCR Acquires Terafina to Expand Digital Banking Platform

Two weeks after announcing its purchase of Cardtronics, fintech hardware giant NCR is acquiring Terafina, a company known for its digital account opening and onboarding tools.

Financial terms of the agreement were not disclosed.

NCR will tap Terafina’s expertise to expand NCR’s sales and marketing capabilities in its Digital First Banking Platform. The offering, which can be tailored to fit institutions ranging in size from large banks to community banks and credit unions, provides an API-led approach to digital banking that can be hosted or deployed on-premise to help banks lower costs and speed up their innovation cycle.

Last year increased the urgency for financial services companies of all kinds to improve their digital customer experiences. Founded in 2014, Terafina suits this need. The company offers a software-as-a-service solution that offers digital onboarding tools and helps banks and credit unions synchronize their branch, call center, and digital operations to provide a consistent user experience across channels.

At FinovateSpring 2019, Terafina Founder and CEO Meheriar Hasan showcased the company’s digital sales platform that helps banks address the needs of their small business clients.

“Digital Banking is a key aspect of the NCR-as-a-Service strategy we laid out at Investor Day in December,” said NCR CEO Michael D. Hayford. “Terafina has been a partner of ours and is already up and running, integrated with our Digital Banking platform. We know this adds value for our clients by making digital account sales, marketing and onboarding easier, so they can provide a superior experience for customers.”

Today’s deal marks NCR’s 29th acquisition since it was founded in 1884. NCR’s purchase of Terafina fits with the company’s strategy to purchase early stage companies to boost its product capabilities and enhance its leadership.

NCR is headquartered in Atlanta, Georgia, and counts 36,000 employees across the globe. The company is listed on the New York Stock Exchange under the ticker NCR and has a market capitalization of $4.81 billion.

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Payoneer To Go Public Via SPAC, Now Valued at $3.3 Billion

Cross-border payments expert Payoneer is the latest fintech to go public via SPAC merger. The New York-based company has agreed to merge with FTAC Olympus Acquisition Corp.

The transaction is expected to close during the first half of this year.

Once the reorganization is complete, the newly created holding company will be renamed Payoneer Global Inc. and the combined company will operate as Payoneer, a U.S. publicly listed entity. After the deal is finalized, Payoneer will have an estimated value of $3.3 billion.

Payoneer was founded in 2005 and offers multi-currency accounts to marketplaces, sellers, freelancers, gig workers, manufacturers, banks, suppliers, and buyers. With a mission to “democratize access to financial services and drive growth for digital businesses of all sizes from around the world,” Payoneer helps users pay and get paid globally as easily as they do locally.

“Payoneer is at the forefront of the rapid, global shift to digital commerce across all sectors,” said Betsy Z. Cohen, Chairman of the Board of Directors of FTAC Olympus Acquisition Corp. “Its innovative and unique high-tech, high-touch platform positions Payoneer at the epicenter of some of the most powerful and enduring trends driving global commerce today. Its proven ability to facilitate the overall growth of e-commerce through capabilities such as B2B payment digitization, global risk and compliance infrastructure, and the enablement for SMBs to rapidly grow and scale sets Payoneer apart.”

Payoneer has raised $270 million from 18 investors including CBC Capital and 83North. Scott Galit is CEO.

Today’s news of Payoneer opting to go public via a SPAC merger echoes a larger trend. Lately, we’ve seen a rising number of tech companies, including Bank Mobile and SoFi, use SPAC mergers to go public. Benefits of the IPO alternative include a faster and cheaper process, no qualification threshold, and no IPO window.

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January’s M&A Fintech Landscape

When analysts predicted what would happen in the fintech sector after the pandemic hit last year, one of the top forecasts was that the industry would consolidate. That is, companies that had an adaptable business model and were fierce enough to fight would get bigger, while other companies would seek exits or sometimes fold altogether.

The economic crunch from the pandemic isn’t the only thing boosting M&A activity. We’ve seen a rising popularity of using a special purpose acquisition company (SPAC) instead of an IPO to go public. With these two forces boosting deal flow, we saw seven mergers and acquisitions announced last month:

This is quite a boost compared to last January when we saw only four M&A deals. In the next couple of months before the summer slowdown occurs, we can expect to see more M&A deals in the headlines. Keep an eye out specifically for two types of deals. First, SPACs are becoming a more legitimate option for a company to make a public debut. Second, digital bank acquisitions will increase as last year’s explosion of players in the digital banking space begins to deflate to a more sustainable level.

I would be remiss if I didn’t mention Visa’s attempted acquisition of Plaid. Visa formally announced its intentions to take over Plaid for $5.3 billion. The acquisition fell through, however, after the U.S. Department of Justice filed a civil antitrust lawsuit to block the deal.

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NAB to Acquire Australian Smart Bank 86 400

National Australia Bank (NAB) announced its intention to purchase digital “smart bank” 86 400 today. The $664 billion (AUD$867) bank plans to spend $168 million (AUD$220) to purchase the digital newcomer.

Since it was founded in 2017, 86 400 accrued more than 85,000 customers, $375 million of deposits, $270 million in approved residential mortgages, and 2,500 accredited brokers.

NAB will integrate the digital bank into its in-house digital bank competitor, Ubank. Twelve-year-old Ubank, with 600,000 users, anticipates the acquisition will accelerate its growth. Specifically, Ubank cited benefitting from 86 400’s experience and technology platform.

“Bringing together UBank and 86 400 is consistent with NAB’s long-term strategy and growth plans and will enable us to develop a leading digital bank that can attract and retain customers at scale and pace,” said NAB Chief Operating Officer Les Matheson. “The combined business will deliver accelerated innovation and an enhanced customer experience to create a stronger and more competitive banking alternative for Australian customers.”

86 400 sought to be a “smart bank” and differentiated itself with a fee-free, transparent approach and local call center. The startup had raised $26 million (AUD$34 million) and had recently received its banking license.

The deal is pending regulatory approvals and is expected to be completed by mid-2021.

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NCR Acquires Cardtronics in $2.5 Billion Deal

Cardtronics found itself at the center of a bidding war this past month, with NCR Corporation submitting the winning bid this week.

This comes after investment firms Apollo Global Management and Hudson Executive Capital initially agreed to buy the ATM operator last month. NCR agreed to a $2.5 billion deal, agreeing to purchase Cardtronics for $39 a share. This beat the bid from Apollo and Hudson, which totaled $2.3 billion at $35 per share. NCR was required to pay a termination fee of $32.6 million.

Cardronics CEO Edward H. West said that the deal is “a testament to the strength and value of Cardtronics, our talented team and customer base, and the complementary nature of our two businesses.”

NCR anticipates that Cardtronics’ Allpoint ATM network will complement its own payments platform and that combined they will connect retail and banking customers.

“This transaction accelerates the NCR-as-a-Service strategy we laid out at Investor Day in December, further shifts NCR’s revenue mix to software, services and recurring revenue, and adds value for our customers,” said NCR President and CEO Michael D. Hayford. “We have had a long-standing relationship with Cardtronics and its outstanding team… Simply put, we are better together.”

The deal, which has been approved by both companies’ Boards of Directors but is still subject to regulatory approvals and closing conditions, is expected to close in mid-2021. Once the deal is finalized, Cardtronics will become a privately held company.

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DriveWealth Acquires Institutional Broker Dealer

Brokerage infrastructure API provider DriveWealth announced this week it acquired Cuttone & Company, a New York-based institutional broker dealer. Terms of the deal were not disclosed.

DriveWealth has purchased Cuttone & Company specifically for its market and regulatory expertise and network of institutional trading partners. The New Jersey-based company will leverage this expertise to offer its own partners access to price discovery on its scalable, configurable, and redundant electronic trading infrastructure.

Ultimately, the acquisition will offer retail investors who trade fractional shares of U.S. equities via DriveWealth’s partners direct access to the point of sale for NYSE securities.

“These added resources, unprecedented transparency, and the ability to trade directly on the NYSE or across all U.S. equity destinations will open up greater opportunities for the retail investors we serve on our platform,” said DriveWealth Founder and CEO Bob Cortright. “Having notional trading technology connected to a flexible brokerage infrastructure allows investors to start small by investing in brands they know and care about. We’re proud to bring this new combination of Cuttone & Company’s institutional knowledge with our retail trading technology to become the most complete brokerage stack available to retail investors today.”

DriveWealth was founded in 2012 by Cortright and his co-founder Julie Coin. The company has raised a total of $100.8 million, including a $56.7 million DriveWealth closed last October.

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SoFi, SPACs, and the Power of Social Capital

First things first: congratulations to SoFi. The financial services platform has earned a $8.65 billion post-money valuation after agreeing to a merger with Social Capital Hedosophia Holdings, a publicly traded special purpose acquisition company or SPAC that specializes in consumer-focused fintech businesses.

Now, what in the world is a SPAC? And why would merging with one be a sound route to the public markets?

A SPAC is pretty much as described. It is a corporation that is built specifically to buy other corporations. A SPAC, which has no other business operations, works by raising money via an initial public offering, and then using that capital to acquire other companies. These entities are taking advantage of the contemporary interest in the IPO market, leveraging demand for new companies – mostly in technology – into demand for firms betting on the ability to know which among these companies are longer-term winners.

The decision to merge with Social Capital – and to pursue this new route to going public – says a lot about the company initially known as “Social Finance” when it was founded almost ten years ago.

“SoFi is on a mission to help people achieve financial independence to realize their ambitions,” company CEO Anthony Noto said. “Our ecosystem of products, rewards, and membership benefits all work together to help our members get their money right.”

By giving its members a one-stop-digital-shop for financial services such as consumer financing, investments, and insurance, SoFi is well-positioned to take advantage of what Noto called “the secular acceleration in digital first financial services offerings.”

This momentum is in evidence within SoFi’s own ecosystem, as well. Social Capital founder and CEO Chamath Palihapitiya noted the “acceleration of cross-buying by existing SoFi members” as creating “a virtual cycle of compounding growth, diversified revenue, and high profitability.”

Speaking on CNBC, Palihapitiya compared SoFi favorably to Amazon and said that the company best represented the kind of banking solutions people want most. From its origins as a student loan refinancing company to its current incarnation as a diversified financial services platform, SoFi reported more than $200 million in total net revenue in Q3 2020 and is on pace generate $1 billion of estimated adjusted net revenue this year. Noto will continue as CEO of SoFi post-merger.

The deal comes just months after SoFi earned “preliminary, conditional approval” from the U.S. Comptroller of the Currency for a national bank charter. A bank charter, the company noted in the merger announcement, would lower the cost of funds and “further support SoFi’s growth.” In an interview with Yahoo! Finance, Noto explained that this was key to having the ability to provide lower interest rates to consumers and would drive innovations like SoFi Money, the company’s cash management account.

Another plum in the purchase is Galileo, a leading provider of customer-facing and backend technology infrastructure services for financial services providers that SoFi acquired last April. There are 50 million accounts on the platform.

From SoFi’s perspective, “deal certainty” was one of the reasons why the company took advantage of the SPAC route to the public markets rather than a traditional IPO. Palihapitiya is a veteran of the nascent SPAC craze, having taken a number of companies, including Virgin Galactic Holdings in 2019, public in this fashion.

Founded in 2011, the San Francisco, California-based company participated in our developers conference, FinDEVr New York 2017. At the event, SoFi teamed up with data platform Quovo to demonstrate their innovations in providing secure authentication for bank accounts. SoFi currently has more than 1.8 million members and has raised $2.5 billion in funding to date.

Equifax to Buy Digital Identity Player Kount

Data and analytics company Equifax announced its acquisition of digital identity player Kount this week. The deal, which is pending regulatory approval, is set to close for $640 million in the first quarter of this year.

Kount was founded in 2007 and offers a range of products and solutions, including chargeback protection, account takeover and bot protection, ecommerce fraud protection, and friendly fraud prevention. The company’s identity network, the Kount Identity Trust Global Network, leverages AI to link trust and fraud data from 32 billion digital interactions, 17 billion devices, and five billion annual transactions across 200 countries and territories. 

All of Kount’s products will be integrated into Equifax’s Luminate Platform, a fraud platform that combines the company’s solutions with machine learning to give clients the information they need to make better decisions about fraud.

Kount has more than 9,000 clients across the globe, including Barclays, Staples, PetSmart, and Chase. Equifax anticipates the purchase will expand its global prevalence in digital identity and fraud prevention solutions.

“The acquisition of Kount will expand Equifax’s differentiated data assets to bring global businesses the information and solutions they need to establish identity trust online,” said Equifax CEO Mark W. Begor. “Equifax is taking advantage of our strong 2020 outperformance and cash generation to make this strategic acquisition. Our data and technology cloud investments allow us to quickly and aggressively integrate new data and analytics assets like Kount into our global capabilities and bring new market leading products and solutions to our customers.”

Kount employees will continue to work from the company’s headquarters location in Boise, Idaho, and will join Equifax’s U.S. workforce.

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Fiserv Acquires Ondot

Fiserv made a key acquisition this week, snapping up digital card services platform Ondot Systems. Financial terms of the deal were not disclosed but the agreement is set to be finalized in the first quarter of next year.

Fiserv is picking up Ondot to enhance its suite of tools that help banks offer digital-first, personalized offerings to their consumers.

“By combining Ondot and Fiserv capabilities at scale, we plan to provide our clients with a unified digital experience, spanning card-based payments, digital banking platforms, core banking, and merchant solutions, enabling them to deliver best-in-class solutions that continue to reduce friction for their customers,” said Fiserv President and CEO Frank Bisignano.

More specifically, Fiserv will use Ondot to help bank clients accelerate digital customer acquisition, drive digital commerce, increase card activation and usage, reduce service costs, and engage contextually.

The deal enhances Fiserv’s standing in the card payment space specifically. The Wisconsin-based company will now be able to help banks offer cardholders instant card issuance and usage, visibility into purchases through enriched transaction information, and actionable insights to help them make more informed spending decisions.

Fiserv’s bank clients will benefit from Ondot’s data enrichment that organizes and identifies transaction and merchant data to minimize chargebacks.

For Ondot, joining forces with Fiserv will offer the company a more global reach and will help it scale up faster. As Ondot President and CEO Vaduvur Bharghavan explained, “Joining with Fiserv will provide Ondot the opportunity to innovate and impact the industry on a global scale. We look forward to expanding the scope of our offerings as we integrate with Fiserv’s vast array of capabilities to continue providing high-quality digital solutions to consumers, merchants, acquirers, networks and card issuers.”

California-based Ondot was founded in 2011 and has raised $51 million. The company processes more than 1 billion transactions per month and provides digital capabilities for over 30 million cards. The company made news earlier this year when it partnered with CU Solutions Group, which agreed to become a reseller of Ondot’s CardApp.

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Upserve Acquired by Lightspeed in $430 Million Deal

Restaurant payments and analytics innovator Upserve is the latest company to be acquired by point of sale (POS) and ecommerce solutions firm Lightspeed.

The $430 million purchase was announced earlier this week, marking Lightspeed’s 10th acquisition since it was founded in 2005. The deal comes on the heels of Lightspeed’s November purchase of ShopKeep that is anticipated to close for $440 million.

“Lightspeed is quickly emerging as a world-leading commerce platform for SMBs and partnering with them to deliver data-based insights through a single digital hub was a natural choice,” said Upserve CEO Sheryl Hoskins. “Together we look forward to empowering North American restaurateurs to deliver superior guest experiences and make them wildly successful.”

Lightspeed anticipates the acquisition will accelerate product innovation and boost its analytics commerce platform. The company’s purchase of Upserve will also help Lightspeed reach an additional 7,000 U.S.-based clients in the hospitality industry.

Originally founded under the name Swipely in 2009, the company rebranded to Upserve in 2016 to reflect the company’s focus on the restaurant industry.

Upserve has raised a total of $40.5 million from 14 investors, including Greylock and Vista Equity Partners. From October 2019 to October 2020, the company recorded approximately $40 million in revenue.

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