UK & European Financial Services M&A: Sector Trends H2 2023 | H1 2024 — Payments
Equity and debt cheques from financial sponsors fuel growth, with investment committee appetite across the full spectrum from Seed through to late stage / pre-IPO. The payments sector bucks the trend on IPOs.
Current market:
M&A activity levels retain a monumental high
We are seeing:
Equity and debt cheques from financial sponsors fuel growth:
- Venture Capital: full spectrum from Seed through to late-stage
- Private Equity: predominantly late-stage (i.e. Series C and beyond)
- Banks: late-stage only
- Payment Giants: predominantly late-stage (early stage mainly through venture arms)
Payment service providers continue to concentrate efforts on inorganic growth:
- Mergers (e.g., Trustly & Slimpay merger)
- Acquisitions (e.g., Worldline's acquisitions of GoPay and Banca del Fucino's merchant acquiring business, as well as Nexi's acquisition of Sparkasse / Banca di Cividale's merchant acquiring business and 30% of Computop)
- Partnerships (e.g., Visa's partnerships with AWS, Micropayments, LemFi, International Money Express and Chipper Cash)
- IPOs (e.g., CAB Payments' £851.4 million LSE Main Market IPO)
Continued hunger of payment service providers for:
- growth capital (>25 successful equity and/or debt funding rounds in the last 12 months)
- expansion into new geographies (e.g. M-Pesa's launch in Ethiopia)
Key drivers / challenges:
Availability of growth capital for payment services providers at all stages of evolution:
Established banks adopt a carefully considered approach to payment service provision:
- Partnerships—the most common (e.g., NatWest's partnerships with StoneX Payments, Icon Solutions and FSB)
- Acquisitions—remain relatively rare (e.g., TBC's acquisition of Fondy)
- Abdication—primarily non-core disposals of merchant acquiring operations (e.g., Banca di Cividale's and Banca del Fucino's respective disposals of merchant acquiring businesses)
Trends to watch:
Increasingly interventionalist regulators:
- Europe: European Commission's proposals for reform of PSDII
- EU Member State: Central Bank of Ireland's multi-year payments strategy to encourage Irish banks to grasp opportunities presented by instant payments
- Nordics: Sveriges Riksbank's concerns that digitalisation of payments has compounded fraud and financial exclusion risks
- UK: Financial Conduct Authority's imposition of severe restrictions on payment service providers on account of AML failings
Our M&A forecast
Stratospheric M&A activity levels to continue as mobile / cashless transactions outpace cash payments.
Tailwinds of Europe's financial sponsor appetite for payment service providers likely to continue, notwithstanding doldrums of private capital fundraisings across fintech verticals more generally.
Payments – Publicly reported deals & situations
High appetite and deep pockets
Market commentary:
Nordic countries are at the forefront when it comes to adopting cashless payment methods. Mobile payments now surpassed cash to become the second most favoured payment method. (Fintech Global–November 2023)
PE / VC — equity investments:
- BOND, NewView Capital and Tribe Capital: Participation in US$50 million Series E funding round in Nium (June 2024)
- KKR and Hannover Digital Investments: Participation in US$93 million Series C funding round in Vitesse (May 2024)
- Dawn Capital and Seed Capital Denmark: Participation in €45 million Series B funding round in Flatpay (April 2024)
- Eurazero, HPE Growth and Sprints: Participation in €85 million funding round in PPRO (March 2024)
- General Catalyst and Northzone: Participation in €50 million Series B funding round in FINOM (February 2024)
- Molten Ventures, SBI Investment, Alstin Capital and Motive Ventures: Participation in €33 million Series A+ funding round in Pliant (January 2024)
- Sanabil Investments: Participation in US$14 million Series A funding round in Nearpay (December 2023)
- Bain Capital Tech Opportunities and Sixth Street Growth: Participation in €285 million debt and equity funding round in SumUp (December 2023)
- Maki.vc and Vitruvian Partners: Participation in €8.5 million Series C+ funding round in Enfuce (November 2023)
- Infravia Growth Capital, One Peak Partners and Hermes GPE: Participation in US$65 million funding round in Paysend (November 2023)
- Global Paytech Ventures: Participation in €15 million funding round in Silverflow (November 2023)
- Ribbit Capital: Participation in US$75 million Series B funding round in Imprint (November 2023)
- Fasanara Capital: Participation in €34.5 million seed funding round in Qomodo (November 2023)
- Mediterrania Capital Partners: Participation in €57 million funding round in Cash Plus (October 2023)
- Dawn Capital: Participation in US$60 million funding round in Brite Payments (October 2023)
- Ribbit Capital: Participation in US$25 million Series A+ funding round in Stitch (October 2023)
- Britannia, Outward Venture Capital, IDC Ventures, Cohen Circle and Cercano Management: Participation in £58 million Series C+ funding round in Curve (September 2023)
PE—acquisitions:
- Circle / Advent International: Acquisition of myPOS (November 2023)
Institutional—acquisitions / equity investments:
- Goldman Sachs: Participation in €1.5 billion funding round in SumUp (May 2024)
- TBC Bank Group: Acquisition of Fondy (April 2024)
- Citi: Equity investment in Icon Solutions (December 2023)
Payments giants:
- Paypoint: £1 million equity investment in Aperidata (May 2024)
- PayPal Ventures: Participation in €18 million Series A+ funding round in Pliant (April 2024)
- PayPal Ventures: Participation in €80 million funding round in PPRO (March 2024)
- PayPal Ventures: Participation in funding round in Mesh (January 2024)
- Mastercard: Participation in US$200 million funding round in MTN Fintech (February 2024)
- Visa: Participation in €8.5 million Series C+ funding round in Enfuce (November 2023)
- MasterCard: Participation in US$65 million funding round in Paysend (November 2023)
- Visa: Participation in funding round in Form3 (September 2023)
Inorganic growth of market players
Market commentary:
Brits made 11.4 million open banking payments in July 2023, a 9% rise on June 2023. The number of active payment users in July 2023 surged to 4.2 million, up 68.2% on July 2022. (Finextra–August 2023)
Mergers:
- Trustly & Slimpay: Payments, Merger (January 2024)
Acquisitions (payment service providers):
- Global Payments: Payments, Acquisition of Takepayments (June 2024)
- Papara: Pakistan payments, Acquisition of SadaPay (May 2024)
- HPS: Payments, Acquisition of CR2 (May 2024)
- PostePay / Poste Italiane: Payments, Acquisition of (undisclosed) equity stake in Networks & Transactional Systems Group (May 2024)
- Pionr: Payments, Acquisition of Tahsildar (April 2024)
- Flatpay: Payment solutions, Successful €45 million Series B funding round led by Dawn Capital (April 2024)
- ECONET Wireless Zimbabwe: Payments, Acquisition of EcoCash Holdings Zimbabwe's fintech business (April 2024)
- Plus que PRO: Payments, Acquisition of Soan (April 2024)
- GoCardless: Open banking, Acquisition of Nuapay (March 2024)
- Visa: Card issuance,Acquisition of Pismo (January 2024)
- team.blue: POS software, Acquisition of helloCash (January 2024)
- Nexi: Merchant acquiring, Acquisition of Sparkasse / Banca di Cividale's merchant acquiring business (December 2023)
- NomuPay: Merchant services, Acquisition of Total Processing (November 2023)
- GSTechnologies: Payments, Acquisition of 60% of EasySend (November 2023)
- BCC Pay: Merchant acquiring, Acquisition of Cassa di Risparmio di Asti's merchant acquiring business (October 2023)
- Worldline: Merchant acquiring, Acquisition of Banca del Fucino's merchant acquiring business (October 2023)
- Fiserv: Digital payments, Acquisition of 49% of European Merchant Services (October 2023)
- Blackthorn Finance: Bill-splitting platform, Acquisition of Steven (September 2023)
- OPay: Pakistan payments, Acquisition of FINJA (September 2023)
- Clear Junction: Crypto payments, Acquisition of Altalix (September 2023)
- Worldline: Payment collection services, Acquisition of GoPay (August 2023)
- Mastercard: Remittance, Acquisition of minority stake in MTN (August 2023)
- Rapyd: Global payment solutions, Acquisition of PayU GPO (August 2023)
- Nexi: POS / e-commerce, Acquisition of 30% of Computop (August 2023)
Acquisitions (other FIs):
- Harel Insurance: Acquisition of Isracard (January 2024)
JVs:
- Mastercard: Open banking, AI open banking JV with bunq (June 2024)
- Mastercard: Digitalisation, Core banking JV with Thought Machine (June 2024)
- Capital One: RegTech, Fraud prevention JV with Stripe and Adyen (June 2024)
- Elavon: Payments, Small business payments JV with Woo (May 2024)
- DNA Payments: RegTech, POS alternative payment methods, Alipay+, JV with Alipay (May 2024)
- ZainCash: Iraqi payments, Iraq digital payments JV with Temenos (May 2024)
- Finastra: Treasury management, Treasury management JV with OpenFin (May 2024)
- Tyl by NatWest: SME payments, SME payments JV with Federation of Small Businesses (May 2024)
- GoCardless: Payments, Trade Pay JV with Topps Tiles (May 2024)
- Bit2Me: Payments, Global payments JV with RevoluGROUP (April 2024)
- Brite Payments: Merchant checkouts, Merchant checkouts JV with Shopware (April 2024)
- Klarna: Payments, Ridesharing and food delivery payments JV with Uber Technologies (April 2024)
- Mastercard: Payment systems, Online payment systems JV with PrestaShop (April 2024)
- Finastra: RegTech, Payments fraud JV with ScotPayments (April 2024)
- Visa: Payments integration, Global payments integration JV with AWS (April 2024)
- Airwallex: X-border payments, Global payments JV with Bird (April 2024)
- Trulioo: RegTech, Payments compliance JV with Nium (April 2024)
- StoneX Payments: X-border payments, Cross-border payments JV with NatWest (April 2024)
- Visa / Tink: Pay-by-bank, Account-to-account / pay-by-bank payments JV with Micropayments (March 2024)
- Visa: Payments, Cross-border payments JV with LemFi (March 2024)
- Micropayment: Open banking, Seamless 'pay by bank' checkouts JV with Tink (March 2024)
- Tarabut: Open banking, Open banking JV with Hakbah (December 2023)
- Visa: Payments, Money transfer JV with International Money Express (December 2023)
- Visa: Payments, Card issuance JV with Chipper Cash (November 2023)
- Marqeta: BNPL, BNPL JV with Scalapay (October 2023)
- TAQA Arabia: e-payments, e-payments JV with Aman (October 2023)
- Swift: X-border payments, Cross-border payments JV with Wise (September 2023)
- Payhawk: Open banking, Open banking JV with Yapily (August 2023)
IPOs:
- CAB Payments: B2B x-border payments, £851.4 million LSE Main Market IPO (July 2023)
Service providers stockpile growth capital
Deal highlight:
White & Case advised Dawn Capital, as lead investor, on its participation in the US$60 million Series A funding round of Brite Payments, a Swedish B2B instant bank payments provider.
- Nium: Successful US$50 million Series E funding round (June 2024)
- Aperidata: Successful £1 million equity investment from Paypoint (May 2024)
- Vitesse: Successful US$93 million Series C funding round led by KKR (May 2024)
- SumUp: Successful €1.5 billion funding round led by Goldman Sachs (May 2024)
- Twill Payments: Successful (undisclosed amount) pre-seed funding round (April 2024)
- Pliant: Successful €18 million Series A+ funding round led by PayPal Ventures (April 2024)
- Hokodo: Successful €100 million debt funding round, sourced from Viola Credit (April 2024)
- PPRO: Successful €80 million funding round led by Eurazeo, HPE Growth, Sprints, PayPal Ventures, J.P. Morgan, Citi Ventures and BlackRock (March 2024)
- MTN Fintech: Successful US$200 million funding round led by Mastercard (February 2024)
- Pliant: Successful €33 million Series A+ funding round led by Molten Ventures, SBI Investment, Alstin Capital and Motive Ventures (January 2024)
- Nearpay: Successful US$14 million Series A funding round led by Sanabil Investments (December 2023)
- SumUp: Successful €285 million debt and equity funding round led by Sixth Street Growth and Bain Capital Tech Opportunities (December 2023)
- Icon Solutions: Equity investment by Citi Treasury and Trade Solutions (December 2023)
- QuantoPay: Successful €150 million funding round (November 2023)
- Enfuce: Successful €8.5 million Series C+ funding round led by Vitruvian Partners, Visa and Maki.vc (November 2023)
- Paysend: Successful US$65 million funding round led by Mastercard, Hermes GPE, One Peak Partners and Infravia Growth Capital (November 2023)
- Silverflow: Successful €15 million funding round led by Global Paytech Ventures (November 2023)
- Fnality: Successful £77.7 million Series B funding round led by Goldman Sachs and BNP Paribas (November 2023)
- Imprint: Successful US$75 million Series B funding round led by Ribbit Capital (November 2023)
- Qomodo: Successful €34.5 million seed funding round led by Fasanara Capital (November 2023)
- Cash Plus: Successful €57 million funding round led by Mediterrania Capital Partners (October 2023)
- Brite Payments: Successful US$60 million funding round led by Dawn Capital (October 2023)
- Stitch: Successful US$25 million Series A extension funding round led by Ribbit Capital October 2023 (October 2023)
- Curve: Successful £58 million Series C extension funding round led by Britannia, Outward Venture Capital, IDC Ventures, Cohen Circle and Cercano Management (September 2023)
Cashing out
Deal highlight:
White & Case advised FLEETCOR Technologies, a leading US-listed global payments business, on the sale of its Russian business PPR to a local investment group.
Russia / Ukraine conflict-related:
- FLEETCOR Technologies: Disposal of Russian business to (unnamed) local investment group (August 2023)
Non-Russia / Ukraine conflict-related:
- GIC: Disposal of 2.5% of Nexi (March 2024)
- Sparkasse / Banca di Cividale: Disposal of merchant acquiring business (December 2023)
- Banca del Fucino: Disposal of merchant acquiring business (October 2023)
- ABN AMRO: Disposal of 49% of European Merchant Services (October 2023)
Banks opt for partnership model?
Market commentary:
Central Bank of Ireland has outlined a new multi-year payments strategy amid concerns that Irish banks are failing to grasp opportunities presented by instant payments. (Finextra–March 2024)
JVs:
- BNP Paribas: Payments JV with BPCE (June 2024)
- NatWest: Cross-border payments JV with StoneX Payments (April 2024)
- Crédit Agricole: Merchant payment services JV with Worldline (March 2024)
- FutureBank: Card issuing JV with Paymentology (December 2023)
- BMO: Contactless virtual cards JV with Mastercard and Extend (August 2023)
- Crédit Agricole: French payments JV with Worldline (July 2023)
- Banco BMP: Merchant acquiring JV with FSI and BCC Iccrea (July 2023)
Acquisitions:
- Discount Bank: Acquisition of 49.9% of PayBox (June 2024)
- TBC Bank Group: Acquisition of Fondy (April 2024)
- NatWest: Acquisition of minority stake in Icon Solutions (March 2024)
- Crédit Agricole: Acquisition of 7% of Worldline (January 2024)
- Citi (Treasury and Trade Solutions): Equity investment in Icon Solutions (December 2023)
- AB Holding / Alfa-Bank: Acquisition of 32% of Mozen (October 2023)
Search for new markets
- Safaricom: Launch of M-Pesa in Ethiopia (August 2023)
Regulatory intervention?
- Sveriges Riksbank: Concerns that digitalisation of payments has brought issues with fraud and exclusion of some groups (March 2024)
- UK Financial Conduct Authority: Imposition of severe restrictions on Nvayo, having found widespread shortcomings in AML controls (October 2023)
- European Commission: Publication of proposals for reform of Payment Services Directive 2 (June 2023)
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