If Chinese billionaire Jack Ma, creator of the retail empire Alibaba, was asked if this is what he imagined would happen in the past (Hebrew) year, there is no chance that he would have imagined that the biggest IPO in history, which he was about to carry out, would explode in his face. But it happened. And a few other pretty crazy things happened this year, a year of a global pandemic but also a vaccine that came and gave us a lot of hope. We have collected the hottest stories of the past Hebrew year in the global fintech industry.
The IPO that didn’t happen – Ant Financial
In the past year, many eyes have been on Jack Ma, one of the richest people in the world, who is behind the online retail giant Alibaba. Ma managed to annoy Chinese regulators in a speech he delivered last autumn, which some claim led to the cancellation of the huge IPO of Ant Financial, his financial division, which is best known through the payment service Alipay, and is in competition with the very popular WeChat in China. The offering was to be the largest in history (at a value of $ 200 billion!), but as mentioned, it did not materialize and Jack Ma went underground. Last June, however, Ant Financial received a consumer financial license, but the company still faces stringent capital requirements and a threat from the government to launch a state digital currency that could hurt its payments business. Cancellation of Ant's IPO was apparently just a first swallow of restrictions on private entities that have become “too” strong in China. China recently released a five-year plan to strengthen regulatory control over leading sectors of the economy, including technology, education and health.
A surge in IPOs and mergers in Fintech
The year, which began with major concerns over the covid-19 pandemic, took a turn in the fintech industry as vaccines became available and economies began to recover. Alongside the benefits fintech companies brought with them in a reality of social distancing, investors who were careful with their capital returned to investing and ??? skyrocketed. According to CBInsights, fintech raised 24% more capital in the first half of 2021 than in the entirety of 2020. At the same time, a series of mergers and acquisitions took place – JPMorgan Chase announced acquisition of the Robo-Advice company Nutmeg, Visa announced acquisition of the open banking technology company Tink and the successful fintech giant Square agreed to part with $ 29 billion to finance the acquisition of Afterpay, who operate in the popular configuration of ‘Buy Now Pay Later’. Visa planned to acquire Tink's competitor, Plaid, a deal that fell through due to antitrust issues, which did not hurt Plaid, which in turn completed a $ 425 million round of funding at a value 3 times higher than Visa agreed to pay for it.
The ‘Buy Now Pay Later’ industry is on fire
This activity is not as well known in Israel due to the collection model of credit card companies, but the area of ‘Buy Now Pay Later’ is hotter than ever. These are companies that offer customers instant financing for their purchases with a convenient payment schedule that competes with traditional banking. The field is not as developed in Israel because credit card companies allow payment deferral to the end of the month as well as convenient instalment transactions, often without interest.
Fintech is hot not only in Europe: Fintech companies are receiving huge value in Latin America
Digital banks have begun to gain momentum in the last decade and especially in the last 5 years, mainly in Europe with an emphasis on England and Germany, which enjoy strong state support. But even in Latin America, fintech is disrupting existing models and making a lot of noise. Argentine fintech Ualá recently completed a $ 350 million round of funding at a value of $ 2.5 billion by Japanese investment giant SoftBank. Shortly before that, Uruguay fintech dLocal completed a $ 9 billion public offering and of course we cannot forget the Brazilian Nubank who is already worth $ 30 billion with a final round of funding starring Berkshire Hathaway, controlled by legendary investor Warren Buffett.
And what is going to happen to fintech companies in this new Jewish year? In Israel at least, a new digital bank, first to be established in over 40 years, is going to start operating. Let’s get the party started.
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