Posted on January 11th, 2023.

Despite the tough market, there were still some notable mergers and acquisition deals completed in FinTech during 2022. Here are five of the biggest.

The past 12 months were tough for a lot of industries. The FinTech sector was among those impacted by supply chain woes and fears of a major global recession.

FinTech funding levels seemed to drop for a lot of markets around the world. For example, FinTech deal activity in Germany, Pakistan, Spain, Israel and others dropped. However, it excelled in many others, including France, Indonesia, and Nigeria.

At the mid-way point of 2022, FinTech Global listed the biggest mergers and acquisitions of the year so far. However, a number of those deals eventually fell through.

One of the most notable deals to have fallen through was investment bank UBS’ proposed $1.4bn all-cash deal for automated wealth management provider Wealthfront. UBS had initially intended to acquire Wealthfront to grow its reach to affluent investors and extend distribution capabilities.

However, in September the pair mutually agreed to terminate their merger deal. Instead, UBS purchased a $69.7m convertible note into Wealthfront. Despite the termination of the deal, UBS iterated it was still focused on growing in the US and deepening its wealth management offering.

Another notable deal to fall through was between online checkout company Bolt and cryptocurrency infrastructure provider Wyre. Bolt had initially planned to acquire Wyre in a $1.5bn deal to bring its one-click checkout services to the cryptos and NFT space.

Speaking on the cancelled deal, Bolt CEO Maju Kuruvilla said, “We will continue our existing commercial partnership with Wyre to pave the path of crypto integration into our ecosystem, bringing Wyre’s innovative crypto infrastructure to the world.”

While some of the big deals dropped off, there were still plenty of big mergers and acquisition transactions during the year.

Here are five of the biggest mergers and acquisition deals in 2022.

Vista Equity Partners drops $8bn for Avalara

Avalara provides tax compliance automation services for businesses of all sizes. In August, US-based investment firm Vista Equity Partners, which is exclusively focused on enterprise software, data and technology-enabled businesses, agreed to buy Avalara for $8.4bn. The deal was made in partnership with institutional co-investors.

This deal saw Vista buy all outstanding shares of Avalara common stock for $93.50 per share in an all-cash transaction. This purchase price represented a 27% premium over Avalara’s closing share price as of July 6, 2022 (the last trading day prior to reports of the acquisition.)

Speaking on the acquisition, Avalara co-founder and CEO Scott McFarlane said, “For nearly two decades, Avalara has ambitiously pursued its vision to automate global compliance, making tax less taxing for businesses and governments around the world. As a leader in this category, we believe our continued investment in innovation and experience is exciting for our customers, partners, and employees.

“We are pleased to partner with Vista and will benefit from their expertise in enterprise software as we build and improve upon our cloud compliance platform.”

Following the close of the deal, Avalara’s shares are no longer traded on the New York Stock Exchange.

Goldman Sachs & Co. served as exclusive financial advisor to Avalara, and Simpson Thacher & Bartlett and Perkins Coie acted as legal counsel. Kirkland & Ellis LLP supplied legal counsel for Vista.

Global Payments buys fellow PayTech

Global Payments, which develops global payment technology, recently announced plans to acquire fellow PayTech solution developer Evo.

The $4bn deal sees Global Payments acquire EVO’s shares at a price of $34 apiece, which is approximately a 24% and 40% premium on its closing price and 60-day average price, respectively.

With the acquisition, Global Payments hopes it can increase its addressable markets, enhance its leadership, expand its presence in new and existing geographies and augment its B2B software and payment solutions with accounts receivable software with broad third-party acceptance.

The company will finance the deal with cash on hand and a committed bank facility. Silver Lake will also make a strategic investment of $1.5bn into Global Payments as a convertible note.

Global Payments president and chief operating officer Cameron Bready said, “The acquisition of EVO is highly complementary to our technology-enabled strategy and provides meaningful opportunities to increase scale in our business globally.

“Together with EVO, we are positioned to deliver an unparalleled suite of distinctive software and payment solutions to our combined 4.5 million merchant locations and more than 1,500 financial institutions worldwide.”

The FinTech company also plans to grow its footprint into Poland, Germany, Chile and Greece, whilst expanding in the US, Canada, Mexico, Spain, Ireland and the UK.

Computer Service Inc (CSI) goes private

Investment firms Centerbridge Partners and Bridgepoint Partners agreed to acquire CSI in an all-cash transaction of $1.6bn.

The share price of the sale was $58, which represented a 53% on its last day of trading.

Speaking on the deal, CSI founder and chairman emeritus John Williams said, “Having formed CSI nearly six decades ago, I am pleased to support this transaction as it will provide shareholders with immediate cash at a compelling value premium.

“In addition, I believe that our customers, employees and communities can rest assured that—based on their history—current management, Centerbridge and Bridgeport will continue CSI’s legacy.”

Technisys acquires SoFi to expand banking capabilities

US-based SoFi Technologies, which offers banking and personal finance services, is acquiring banking software developer Technisys in a $1.1bn deal.

This all-stock deal is equivalent to roughly 10% of SoFi’s market value. The deal gives SoFi control of Technisys’ core banking platform, which is the back-end technology that banks use to power mobile banking apps, open accounts and keep track of customer deposits.  

SoFi plans to leverage the Technisys platform to roll out personalised financial services to its banking customers. It will also allow other banks and FinTech companies to use the platform, which is currently predominantly used by banks in Latin America.

The company expects the acquisition to generate up to $800m in additional revenue through 2025. It will also create up to $85m in cost savings over this time.

SoFi currently relies on a legacy software vendor, but this deal will enable it to bring the capabilities in-house.

Fiserv acquires Finxact to boost its digital bank strategy

Fiserv, a developer of payments and banking solutions, acquired Finxact in a $650m deal.

The deal will help Fiserv advance its digital bank strategy, expand its account processing, digital and payments solutions, and bolster its position in the market. It also hopes to accelerate and expand its digital banking experiences for its customers.

It also hopes Finxact will bring domain expertise and a transformative approach to help Fiserv introduce ‘innovative paradigms’ in open banking and FinTech integrations. With this, clients will be able to improve the agility of their digital banking operations and sustainability reduce time to market for new customer experiences.

Fiserv CEO and president Frank Bisignano said, “We’re accelerating the delivery of innovative digital banking experiences for our clients and elevating their ability to compete in a rapidly changing market.

“This transaction complements our Fiserv account processing solutions and expands our opportunities to serve clients by bringing together Finxact’s highly flexible and scalable API-first capabilities with the comprehensive digital financial solutions portfolio and expertise of Fiserv.

Source: Fintech Global