UK & European Financial Services M&A: Sector trends H2 2022 | H1 2023 — Payments
Deliver a burst of bright sunlight amidst storm clouds across the European financial services M&A landscape. Service providers merge, acquire, partner and de-SPAC their way to scale, scope and new technology.
Overview
Current market
- Stratospheric M&A activity levels
We are seeing
- Payment service providers deploy multifaceted inorganic growth strategies:
- Mergers (e.g., Vipps & MobilePay and Advanced Payment Solutions, Armenotech & Tempo France)
- Acquisitions (e.g., Worldline’s acquisitions of Banco di Desio e della Brianza’s merchant acquiring business, 55% of SoftPos.eu, 40% of Online Payment Platform and 80% of Eurobank Merchant Acquiring)
- Partnerships (e.g., Ingenico’s partnerships with Binance (cryptocurrency payment acceptance), Splitit (consumer credit) and Fujitsu (palm vein authentication))
- De-SPACs (e.g., Digital Virgo de-SPAC into Goal Acquisitions)
- Sustained investor appetite for participation in funding rounds from PE, VC, bank, insurer and SWF investors
- Pan-European banks adopt differing inorganic strategies in the payments arena:
- Strategic partnerships (e.g., Crédit Agricole’s French merchant acquiring partnership with Worldline and Banco de Sabadell’s Spanish payments partnership with Nexi/Paycomet)
- Acquisitions (e.g., ING’s acquisition of Paymento Financial and Société Générale’s acquisition of majority stake in PayXpert)
- Cross-border consortia to rival global giants (e.g., European Payments Initiative’s acquisitions of iDeal and Payconiq)
Key drivers/challenges
- Payment service providers searching for:
- Synergies and cost savings (e.g., Payplug & Dalenys merger)
- Strategic geographic market access (e.g., Nexi’s acquisitions of 80% of Paycomet (Spain) and BPER Banca’s merchant acquiring and POS management business (Italy))
- Exclusive access to new technology (e.g., American Express’ acquisition of Nipendo and Mastercard’s acquisition of Baffn Bay)
- Scale (e.g., MangoPay’s acquisition of WhenThen and SaltPay’s acquisition of MeaWallet)
- Conquer market segments (e.g., Bluefin’s acquisition of TECS Payment Systems)
- Availability of growth capital for payment services providers at all stages of development:
- Early-bird investors looking to cash out:
- Bank consortiums (e.g., 113 Sanpaolo’s banks’ disposal of minority stake in Bancomat)
- Individual banks (e.g., Intesa Sanapolo’s disposal of 5.1% of Nexi)
- Private equity (e.g., MCI Capital’s disposal of Mobiltek)
- Management/Founders (e.g., de-SPAC of Digital Virgo)
Trends to watch
- Increasingly complex regulatory landscape ahead:
- Finetuning vs. reform vs. overhaul of PSD2 infrastructure (e.g., European Commission’s new proposals for Payment Services Directive 3)
- Increasing regulatory scrutiny of larger payments institutions (e.g., HM Treasury’s proposals to expand perimeter for systemic payment firms)
- European government intervention to combat disappearance of cash (e.g., collaboration between banks to establish banking pods and shared banking hubs)
- Sophisticated open banking architecture (e.g., UK Joint Regulatory Oversight Committee’s proposals for promoting open banking)
- Segregation of payments (e.g., European Credit Sector Associations’ proposals for removal of payments from the upcoming European Digital Identity plan)
Our M&A forecast
High levels of M&A activity to continue as cashless transactions become the norm across Europe. Europe’s banks face an identity crisis as they decide whether to abdicate the payments arena to global processing giants and fnancial sponsor-backed service providers.
Other financial services—Publicly reported deals & situations
High appetite and deep pockets
Deal highlight:
White & Case advised First Abu Dhabi Bank on its co-investment in connection with the £2.2 billion recommended cash acquisition by Brookfield of Network International Holdings, a Middle East and Africa payments business listed on the Main Market of the London Stock Exchange.
Sovereign wealth funds lead PE co-investment activity. The value of PE co-investments involving SWFs, pension managers, corporate investors and family offices inceased nearly 39% year-over-year in Q1 2023 to US$42.3 billion. S&P Global (May 2023)
PE /VC—equity investments:
- Institutional Venture Partners: Participation in US$60 million Series B funding round in Volt (June 2023)
- Base 10 Partners: Participation in €30 million pre-Series-B funding round in Nomba (May 2023)
- Finch Capital and Outpost Ventures: Participation in US$53.6 million Series A funding round in NomuPay (May 2023)
- Aquiline Capital Partners: Participation in equity funding round in Fullsteam (May 2023)
- Northzone and RTP Global: Participation in £62.5 million Series A funding round in Yonder (April 2023)
- SBI Investment: Participation in US$28 million Series A funding round in Plaint (February 2023)
- Runway Growth Capital and The Olayan Group: Participation in US$50 million Venture funding round for CloudPay (October 2022)
- Addition: Participation in €320 million Series D funding round for Satispay (September 2022)
- Seventure Partners: Participation in €3.2 million Seed funding round for Soan (September 2022)
- Accel: Participation in £22.5 million pre-seed funding round for Super Payments (August 2022)
- QED Investors: Participation in US$50 million pre-Series C funding round for TeamApt (August 2022)
PE—acquisitions:
- Brookfield Asset Management: Acquisition of Network International (June 2023)
- FSI: Acquisition of minority stake in Bancomat (April 2023)
- Main Capital Partners: Acquisition of van den Berg (January 2023)
Institutional—acquisitions / equity investments:
- Credit Suisse: Participation in US$1 billion debt funding round for Curve (December 2022)
- Nomura: Minority equity investment in Fnality (September 2022)
- J.P. Morgan: Acquisition of Renovite (September 2022)
MBOs:
- Maciej Langman: Acquisition of Mobiltek (December 2022)
SWFs:
- Abu Dhabi Investment Authority: Participation in equity funding round in Fullsteam (May 2023)
- GIC and Temasek: Participation in US$6.54 billion Series I funding round in Stripe (March 2023)
Payments giants:
- Mastercard: Participation in €40 million funding round in Fabrick (June 2023)
Insurers:
- Clal Insurance: Acquisition of MAX (March 2023)
Inorganic growth of market players
Deal highlight:
White & Case advised FleetCor Technologies, a leading global provider of payment processing services, on its acquisition of Business Gateway, a German company specialised in tyre service as well as maintenance and repair management technology.
Deal highlight:
White & Case advised W.A.G Payment Solutions, a wholly owned subsidiary of Eurowag, on the acquisition of Grupa Inelo from, amongst others, Innova Capital and European Telematics Holding.
Nigerian banks reap benefits of digital push, with the volume of instant payment transactions hitting approx 5.2 billion in 2022, up from 700 million in 2018. S&P Global (March 2023)
Demand for banknotes has been at the lowest levels for 20 years. Finextra (April 2023).
A record 91.2% of all eligible card transactions were made using contactless payments in 2022. Finextra (February 2023)
Faster Payments volumes increase by 23%. One-third of all payments in the UK were made via contactless methods in 2021, up 36% from 2020. Finextra (August 2022)
Pandemic accelerates Eurozone consumers’ move from cash. Card payments rose to 46% of face-to-face transactions by value, up from 43% three years ago, while the use of cash slipped from 47% to 4%. Financial Times (December 2022)
Mergers:
- Advanced Payment Solutions, Armenotech & Tempo France: Merger (May 2023)
- Synalcom & Qori: Merger (March 2023)
- Vipps & MobilePay: Merger (October 2022)
- Payplug & Dalenys: Merger (September 2022)
Acquisitions:
- Nymcard: Acquisition of Spotii (June 2023)
- Hokodo: Acquisition of H Pay & Go (June 2023)
- PayTel: Acquisition of Kar-Tel (May 2023)
- Marketcom Software: Acquisition of Conify (May 2023)
- Fabrick: Acquisition of Judopay (May 2023)
- Polski Standard Platnosci / Blik: Acquisition of VIAMO (May 2023)
- Global Payments: Acquisition of Mitobit (April 2023)
- Fleetcor Technologies: Acquisition of Business Gateway (March 2023)
- Ingenico: Acquisition of Phos (March 2023)
- W.A.G Payment Solutions: Acquisition of Grupa Inelo (March 2023)
- MangoPay: Acquisition of WhenThen (March 2023)
- Mastercard: Acquisition of Baffin Bay (March 2023)
- FairMoney: Acquisition of Payforce (March 2023)
- Nexi: Acquisition of 80% of Paycomet (February 2023)
- Netcetera: Acquisition of Kamino (February 2023)
- Hala: Acquisition of Paymennt.com (February 2023)
- SaltPay: Acquisition of MeaWallet (February 2023)
- American Express: Acquisition of Nipendo (January 2023)
- Aspire Commerce: Acquisition of Avila House (January 2023)
- Nexi: Acquisition of BPER Banca’s merchant acquiring and POS management business (January 2023)
- Nexi: Acquisition of Banco di Sardegna’s merchant acquiring and POS management business (January 2023)
- Satispay: Acquisition of 60.9% stake in Onyon (January 2023)
- Mail to Pay: Acquisition of Peace of Mind (December 2022)
- BVNK: Acquisition of System Pay Services Limited (November 2022)
- Chipper Cash: Acquisition of Zoona Transactions (November 2022)
- Worldline: Acquisition of Banco di Desio e della Brianza’s merchant acquiring business (November 2022)
- Bluefin: Acquisition of TECS Payment Systems (November 2022)
- PayTabs: Acquisition of Digital Pay (November 2022)
- Worldline: Acquisition of 55% of SoftPos.eu (October 2022)
- valU: Acquisition of minority equity stake in Kiwe (October 2022)
- Prosegur Cash: Acquisition of ChangeGroup (October 2022)
- MoneyGram: Acquisition of 12% of Jingle Pay (October 2022)
- Worldline: Acquisition of 40% of Online Payment Platform (September 2022)
- Access PaySuite: Acquisition of Pay360 (September 2022)
- Givex Corporation: Acquisition of Counter Solutions (August 2022)
- Worldline: Acquisition of 80% of Eurobank Merchant Acquiring (July 2022)
- Giesecke + Devrient: Acquisition of Valid’s US payments and identity assets (July 2022)
JVs:
- TPAY: Direct Carrier Billing JV with Bango and Etisalat Egypt (May 2023)
- Digital Jersey: Jersey Digital Partnership Programme /Digitalisation JV with Mastercard (April 2023)
- CellPoint Digital: End-to-end money movements JV with Nium (March 2023)
- Sparxpres: Card and financing platform with Tuum and Trifork (March 2023)
- Paysera: Cash pick-up JV with Ria Money Transfer (March 2023)
- Ingenico: Cryptocurrency payment acceptance JV with Binance (February 2023)
- Paymentology: Credit and debit card issuing and processing JV with 10x (February 2023)
- Ingenico: Consumer credit JV with Splitit (February 2023)
- Stripe: US, Europe and Canada payments processing JV with Amazon (January 2023)
- Ingenico: Palm vein authentication JV with Fujitsu (January 2023)
- EazyPay: Open banking JV with Spare (November 2022)
- Ripple: Real-time mobile payments JV with MFS Africa (November 2022)
- Mastercard: Digital payments JV with Spenn (November 2022)
- ToYou: Saudi Arabia end-to-end payments JV with M2P Fintech (November 2022)
- LHV: Real-time euro payments JV with Lightyear (November 2022)
- Swift: Trade financing validation JV with MonetaGo (October 2022)
- Computop Paygate: Open banking JV with Token (October 2022)
- Mastercard: Italian request-to-pay JV with PostePay (October 2022)
- CWallet: Qatar prepaid and multi-currency cards JV with M2P Fintech (October 2022)
- Curve: Wearable payments JV with Fidesmo (October 2022)
- Nuapay: Open banking JV with Pay360 (September 2022)
- NagaPay: EEA fiat and crypto JV with Contis (September 2022)
- Flutterwave: African payments JV with Google Pay (September 2022)
- Wise: Open finance JV with Plaid (August 2022)
- Barclaycard Payments: Microbusiness payments JV with BT (August 2022)
- LianLian: US /UK ecommerce entrepreneurs and merchants lendtech JV with Uncapped (August 2022)
- Mastercard: Cryptocurrency payment card JV with Binance (August 2022)
- Nexi: Digital payment solutions JV with Microsoft (July 2022)
- Synch Payments: Money-transfer app JV with Nexi (June 2022)
De-SPACs:
- Digital Virgo: De-SPAC into Goal Acquisitions (November 2022)
Service providers stockpile growth capital
- Volt: Successful US$60 million Series B funding round led by Institutional Venture Partners (June 2023)
- Fabrick: Successful €40 million funding round led by Mastercard (June 2023)
- Nomba: Successful €30 million pre-Series B funding round led by Base 10 Partners (May 2023)
- NomuPay: Successful US$53.6 million Series A funding round led by Finch Capital and Outpost Ventures (May 2023)
- Fullsteam: Successful equity funding round led by Aquiline Capital Partners and Abu Dhabi Investment Authority (May 2023)
- Yonder: Successful £62.5 million Series A funding round led by Northzone and RTP Global (April 2023)
- Stripe: Successful US$6.54 billion Series I funding round led by GIC and Temasek Holdings (March 2023)
- Pliant: Successful US$28 million Series A funding round led by SBI investment (February 2023)
- Curve: Successful US$1 billion debt funding round led by Credit Suisse (December 2022)
- CloudPay: Successful US$50 million Venture funding round co-led by Runway Growth Capital & The Olayan Group (October 2022)
- Satispay: Successful €320 million Series D funding round led by Addition (September 2022)
- Soan: Successful €3.2 million Seed funding round led by Seventure Partners and Allianz Trade (September 2022)
- Super Payments: Successful £22.5 million pre-seed funding round led by Accel (August 2022)
- TeamApt: Successful US$50 million pre-Series C funding round led by QED Investors (August 2022)
- TagPay: Successful €25 million funding round led by Long Arc Capital (January 2021)
Early birds cash out
- Shareholders of Bancomat: (113 Italian banks, led by Intesa Sanpaolo) Disposal of minority stake in Bancomat (April 2023)
- MCI Capital: Disposal of Mobiltek (December 2022)
- Intesa Sanpaolo: Disposal of 5.1% of Nexi (November 2022)
Banks opt for partnership model?
JVs:
- Crédit Agricole: French merchant acquiring JV with Worldline (April 2023)
- Deutsche Bank: Payment services JV with Moss
- Banco de Sabadell: Spanish payments JV with Nexi / Paycomet (February 2023)
- Standard Chartered Bank: PayNow JV with Allinpay (February 2023)
- BNP Paribas: Electronic invoice JV with Libeo (January 2023)
- Wio Bank: UAE e-commerce JV with Stripe (October 2022)
- Deutsche Bank: Payment acceptance and SME banking JV with Fiserv (October 2022)
- Wio Bank: Account deposits JV with LuLu Financial Group (October 2022)
- DZ Bank: Request-to-pay JV with PPI (October 2022)
- Banque Du Caire: Egyptian payments JV with IBAG (September 2022)
Acquisitions:
- TBC Bank: Acquisition of remaining 49% of Payme (May 2023)
- Santander: Acquisition of 12.41% of Ebury (February 2023)
- ING Bank Slaski: Acquisition of Paymento Financial (January 2023)
- Société Générale: Acquisition of majority stake in PayXpert (September 2022)
Consortia to rival the big fish:
- European Payments Initiative: Acquisition of iDeal (April 2023)
- European Payments Initiative: Acquisition of Payconiq (April 2023)
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