M&A Financial Institutions: Specialty Finance / Marketplace Lending | White & Case LLP

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Trends in the financial institution mergers and acquisitions sector: specialist finance / market lending – H1 2021 and outlook for H2 2021

M&A levels fell in the first half of 2021. As institutional banks supported commercial and B2B financing platforms and venture capital supported P2P financing, SME and treasury disruptors, the two categories of investors had to be convinced to part with their cash.

Overview

CURRENT MARKET

  • Moderate decline in M&A activity

WE SEE

  • Investment interests of:
    • Institutional banks (e.g. Barclays investment in Hubx)
    • Venture capital (e.g. IAG Silverstripe’s investment in Zopa)
    • Other FIs (for example, acquisition by Schroders of 50.1% of RF Eclipse)
  • The first players are multiplying:
    • Through acquisitions (for example, the acquisition of Asset Alliance by Arbuthnot)
    • Through fundraising (for example,> 6 specialized European financial companies built up growth capital in the first half of 2021)

KEY FACTORS / CHALLENGES

  • Institutional banks support:
    • Trade finance platforms (e.g. Sumitomo Mitsui Banking’s investment in TradeIX)
    • B2B funding platforms
  • Return of financial sponsors:
    • SME lenders (e.g. £ 160million fundraising from ThinCats)
    • P2P loans (e.g. Beehive and Zopa both raised funds in the first half of 2021)
    • Home loans (e.g. CrowdProperty’s £ 1.1million crowdfunding)
    • Treasury Funding (for example, TreasurySpring’s US $ 10 million Series A funding round)
  • Climate-friendly lenders are attracting interest:
    • Leasing of electric vehicles (e.g. fundraising of 50 million euros from MisterGreen)
    • Impact investing (for example, the € 20 million Seed fundraiser from Remagine)

TRENDS TO WATCH FOR

  • P2P platforms are growing faster in Europe (compared to UK) due to Brexit
  • Only robust P2P platforms will survive:
    • Strength: Some European P2P platforms have been accredited to provide loans to government-backed SMEs
    • Weakness: Some European P2P platforms have been forced to change lending criteria in response to the COVID-19 pandemic

OUR M&A FORECAST

Mergers and acquisitions are expected to remain relatively stable in the near term, as the COVID-19 pandemic promulgates a natural selection between strong and weak specialist fundraising.

Specialty Finance / Marketplace Lending — Publicly Reported Business and Situations

Growing interest from buyers / investors / partners

Over the past two years, the European P2P investment market has more than doubled. The market is currently valued at US $ 67.93 billion and is expected to grow at a compound annual growth rate of 29.7% from 2020 to 2027. SWAPER (February 2021)

Institutional banks:

  • Sumitomo Mitsui Banking (trade finance): Acquisition of a stake in TradeIX (April 2021)
  • Barclays (B2B capital raising platform): Participation in US $ 5.5 million Series A funding round for Hubx (February 2021)

Private equity / venture capital:

  • IAG Silverstripe: Participation in a £ 20million funding round for Zopa (May 2021)

Business Consolidators:

  • Opendo (Operational leasing): Acquisition of Alm. Branded leasing (February 2021)
  • Sydbank (Financial leasing): Acquisition of 10.4% of Opendo (February 2021)
  • Cazoo (Leasing): Acquisition of Cluno (February 2021)

FI:

  • Schröders: Acquisition of 50.1% of RF Eclipse (April 2021)

Specialized finance companies are growing

Acquisition:

  • Arbuthnot (Leasing): Acquisition of Asset Alliance (April 2021)
  • DORI Vermögensverwaltungs (Leasing): Acquisition of 36% of Factoring membership (January 2021)

Constitution of growth capital:

  • ThinCats (Alternative finance): Successful £ 160million investment from Wafra Capital Partners and Quilam Capital (June 2021)
  • TreasurySpring: Successful USD 10 million fundraising round, led by MMC Ventures and Anthemis Group (June 2021)
  • Beehive (P2P loan): UAE Development Bank $ 8.1 million capital injection (June 2021)
  • MisterGreen (Leasing): Successful fundraising of 50 million euros (May 2021)
  • Zopa (P2P loan): Successful £ 20million investment from existing investors (March 2021)
  • Remagine (‘Impact’ funding platform): Successful € 20 million seed funding round (January 2021)

Click here to download “Financial Services Mergers and Acquisitions Rise to Dizzying Heights as COVID-19 Travel Bans and Bans End” PDF

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