Fintech M&A Rebounds in Q2’17 – KPMG Report
Total global fintech investment more than doubled quarter over quarter in Q2’17 to US $8.4 billion, up from US$3.6 billion in Q1’17, according to the KPMG Pulse of Fintech report.
The fintech market rebound was helped by global M&A investment, with US$5.9 billion in deal value for M&A for the quarter. Comparatively, global VC funding to fintech companies declined slightly, with just over US$2.5 billion in VC funding raised by fintechs in the quarter.
The buyout of Toronto, Canada-based D+H by US-based Vista Equity Partners, D+H being combined with Misys to create Finastra, accounted for US$3.6 billion in deal value in the Americas, contributing to more than half the total fintech funding during Q2’17, while the U.S. and Europe saw the vast majority of fintech investment, accounting for US$2 billion respectively.
The UK saw a major positive move one year following the Brexit referendum, with US$1.4 billion in total fintech funding in Q2’17, a six-quarter high, and over US$1 billion more than the Q1’17 tally.
European fintechs funding increased overall, but VC specific funding dropped significantly as Europe saw US$2 billion in fintech investment during Q2’17; a significant four-quarter high although well below the peak investment high of US$5.8 billion seen in Q4’15. Deal volume in the region declined from 110 to 90 quarter over quarter, still relatively strong historically.
Asia lagged significantly behind the other regions with US$760 million invested, most likely due to a lack of significant megadeals. Total fintech funding in Asia remained relatively steady quarter over quarter, with US$760 million invested across 51 deals during Q2’17, compared to US$790 million across 56 deals in Q1’17. Asia’s Q2 fintech financing trends were characterized by geographic diversity and a lack of mega-financings.
China notched nine transactions (VC and M&A) for a total of US$282 million in deal value, a slight uptick from the seven closed in Q1’17. Despite a decline in deal value, India recorded 19 deals and remains on pace to post an impressive year for fintech investment. Corporate participation continues to soar in the region, with VC investment growing from a strong 22.5 percent in Q1’17 to a record high of 36.6 percent in Q2’17, revealing a deep interest in fintech innovation from strategic players in Asia.