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

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

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

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

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

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

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

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 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

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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Snapchat Parent Company Acquires Voca.ai

Snapchat Parent Company Acquires Voca.ai

With all of the drama around TikTok these days, you may have forgotten about Snap. Formerly known as Snapchat, the photo messaging app allows users to send and receive ephemeral messages complete with fun filters, animation, and augmented reality.

It appears that Snap may be on the verge of change, as the company reportedly acquired Voca.ai, a smart voice assistant that helps replace customer service agents in call centers. The acquisition, which was first reported by Globes and later picked up by TechCrunch, is estimated to be around $70 million.

While one of the main use cases for Voca.ai’s technology is phone-based debt collection, it can also be used for surveys, customer service, appointment scheduling, and lead qualification. As the name suggests, Voca.ai leverages AI to imitate human representatives’ responses. To create a convincing, human-sounding cadence the technology adds pauses and filler words such as “um.” 

Snap may intend to leverage Voca.ai to build out a new voice command feature. According to Globes, “This range of abilities in identifying speech and producing artificial speech have attracted Snapchat, which in June launched a voice command function for users to request filters, which can alter their appearance. For example, the user can ask for their hair to turn pink, and the voice command function ensures that the operation is completed.”

Voca.ai was founded in 2017 and is headquartered in Herzliya, Israel. The company has raised $6 million across two rounds of funding. Voca.ai won a Best of Show award at FinovateSpring last year after company CEO Einav Itamar demonstrated how a bank used the AI voice agent to follow up on a loan inquiry.


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CoverHound Acquired by Insurance Brokerage Firm

CoverHound Acquired by Insurance Brokerage Firm

Online insurance marketplace CoverHound announced today it has been picked up by insurance brokerage firm Brown & Brown in an acquisition deal this week. Terms of the arrangement, which also includes CoverHound subsidiary CyberPolicy, were not disclosed.

With 300 locations, Brown & Brown is the sixth largest insurance brokerage firm in the nation. The company has an 80 year history in the insurance industry and has since acquired more than 500 insurance agencies.

Today’s acquisition will help Brown & Brown tap into CoverHound’s and CyberPolicy’s digital reach into the insurance market for individuals and small businesses. The digital market has been growing quickly since the onset of the global pandemic. The deal will combine Brown & Brown’s strong carrier relationships and product knowledge with CoverHound and CyberPolicy’s partnership network and customer experience.

“We see CoverHound as an important platform for Brown & Brown’s expansion into the digital insurance marketplace while at the same time helping our traditional businesses to continually deliver an exceptional customer experience,” said Brown & Brown Senior Vice President of Technology, Innovation, and Digital Strategy Steve Boyd. “By combining CoverHound with our expertise and market strength, we will be able to meet more customers where they are and provide them with the appropriate coverage for their unique exposures.”

Brown & Brown will allow CoverHound and CyberPolicy to continue to operate independently under the Brown & Brown brand. The two tech firms will focus on scaling digital partnerships.

San Francisco-based CoverHound was founded in 2010 and has since raised $111 million. The company brings transparency to the insurance shopping process, offering a marketplace where shoppers can compare and purchase both personal and business insurance products.


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Lightspeed to Acquire ShopKeep in $440 Million Deal

Lightspeed to Acquire ShopKeep in $440 Million Deal

Cloud-based point of sale solution ShopKeep is taking an exit after 12 years in the business. Lightspeed, a competitor in the cloud-based POS space, has acquired ShopKeep for $440 million.

Lightspeed anticipates the buy will help position it as a leader for complex retailers and restaurateurs seeking to modernize their operations. The deal will also give Lightspeed increased market share. The company will serve over 100,000 customer locations worldwide, generating approximately $33 billion in gross transaction volume.

For its part, Shopkeep will benefit by offering clients access to Lightspeed’s analytics, loyalty, ecommerce, and payments modules. Shopkeep clients will also be able to tap Lightspeed’s multi-location solution.

“ShopKeep’s commitment to enabling independent businesses to dream big and rise above industry and economic challenges is deeply aligned with our own mission to power the future of commerce,” said Lightspeed Founder and CEO Dax Dasilva. “This acquisition will bring ShopKeep merchants, small and medium-sized businesses that make up the backbone of the U.S economy, into the Lightspeed family, providing them even more crucial product innovation and world-class support as they drive the reinvention of American commerce.”

The deal is subject to customary closing conditions and is expected to close by the end of this year.

ShopKeep helps more than 20,000 clients across the U.S. accept a range of payment types and enhance their business with features such as automatic inventory tracking, employee management, and real time sales reporting. Since it was founded in 2008, the company had raised $137 million in funding.


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