Funding and Deals Week ending June 30th in Banking, Wealth and Asset Management Technologies
Funding Overview: No deals of note this week outside of the Freetrade Freetrade , Crowdcube financing which closed well above its target, even though the average ticket sizes were quite low on the overall deal. The valuation mark down of 65% got a lot of the early press, but was actually more in the middle of the range as far as markdowns go, and certainly Freetrade had some good news to share in terms of assets on platform as well as its own trading performance to at least alleviate fears.
https://financialit.net/news/fundraising-news/uk-fintech-freetrade-builder-app-consumers-life-savings-raises-ps176m
Given the above, in a broader Fintech setting, I noted the following themes this week
1.?????Investment in cyber security related scale ups continues at an unabated pace. While a lot of the focus remains on prevention and detection as it relies to both denial-of-service attacks as well as attempts at intrusion, there is also an increasing number of companies that focus on fraud, and suspicious behaviour that are also being funded. ?Almost all the ventures that are now being funded to scale are utilizing different pattern recognition and predictive analytics based on using deep learning techniques to both detect as well as prevent cyber attacks, as well as continuously evolve new techniques based on capturing more attribution data based on origin, form of attack, and method of intrusion.
See these links for some fundings based on this theme below:
https://fintech.global/2023/06/27/bonjourcyber-secures-e1m-in-funding-for-cybersecurity-services-expansion/ BonjourCyber
https://businesscloud.co.uk/news/cyber-firm-resistant-ai-targets-uk-expansion/ Resistant AI
2.?????Investors also have retained some appetite to support b2b SAAS solution designs that enable SME to improve their financial management, as well as optimally manage their cash flow requirements. The interest here has most likely been bolstered by the shifting interest rate and solvency climate, which is providing both new challenges in terms of the cost as well as the availability of liquidity. ??While private debt has yet to be deterred from offering facilities to alternative SME financing approaches, the climate clearly supports creating more intelligent finance platforms to support SMEs.
See these links for some fundings based on this theme below:
https://ffnews.com/newsarticle/funding/fintech-company-fennech-secures-2-million-seed-funding-from-lloyds-banking-group/ Fennech Financial Ltd
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Business Exit Rumours
There were two notable and somewhat connected rumours that caught my eye this week. First there was the news that Orange is seeking to execute a deal with BNP Paribas to offload its digital banking and brokerage assets. Orange was really the only Telecom provider who ever, through their venture arm, really succeeded in launching and scaling a digital financial service capability, but despite some success, it has not ever been a profitable venture and has not really enabled the telco to build a scalable direct consumer finance business.
Here is the link to the news. Orange Bank
This dovetails nicely with the second rumour regarding Goldman Sachs. There is already ripe speculation in the market that the consumer finance division is going to sell its home refurbishment lending business, Greensky, but there are now more rumours that Goldman is looking to exit its apple credit card relationship through a sale of this business line to American Express.??If this proves true, it would be quite a significant decision reversal since GS has indicated that its intentions were to expand rather than exit its relationship in the consumer finance sector with Apple.??While GS remains a pre-eminent force in the institutional space, and is increasingly competing successfully within the mid to large sized corporate sector too, it looks like by next year the adventure the company has had to build a direct relationship with consumers as a savings, investing, and lending partner is coming to an end. See the link below
https://www.cnbc.com/2023/06/30/goldman-in-talks-to-offload-apple-financial-products-to-american-express-source.html 高盛
Completed/Announced Deals
Titan wealth acquiring Square mile Titan Wealth - Titan has been building a much more diversified service and product strategy through its acquisition approach then most others, and this deal to buy a firm that offers research, and outsourced asset management services to IFA, represented a further broadening in their solution design, while also taking their asset base to ￡12bl. The initial comments from leadership on the deal suggests that Square Mile will continue to operate its own MPS solution, but I suspect that Titan will also be looking at the acquisition as also a way in which it can provide a highly diversified investment solution design for IFAs that now covers discretionary, advisory and this type of MPS approach.?There are 3 or 4 other players who bring some of the same capabilities as Square Mile to the market, though not many have reached the size of AUM that Square Mile had reached.
IQ-EQ acquires ComplianceAsia and Lymon IQ-EQ - This appears to be a strategically significant deal by Astorg backed IQ-EQ. It not only delivers complementary capabilities in regulatory compliance within the Asia/Pacific region that has been geographically absent in this division, but also creates a global organizational capability that will definitely capture the attention of larger alternative fund managers that want to have their regulatory compliance centrally managed by an organization with a truly global footprint.?While perhaps the APAC region isn’t quite the same growth driver for regulated services as it once was, Singapore remains a critical gateway market which IQ-EQ can now access.
Meilleurtaux acquiring Patrimea Meilleurtaux - Silverlake backed Meilleurtaux continues to look for opportunities to expand its digital wealth and savings service offering, and this acquisition further bolsters both its client and asset base, taking the later toward E3bl. Since acquiring the company Silverlake has put a lot of attention on creating a firm focused on the full service needs of the mass affluent segment, and this acquisition is another step forward. One might expect from here, Meilleurtaux may start to look at insurance and the unit linked investment market.