eToro confirms $10.4 billion SPAC deal with FinTech Acquisition
Well, you heard it here first folks.
Following our initial exclusive report early yesterday that Retail FX broker eToro was planning on going public by combining with a special purpose acquisition company (SPAC) which would value the company at $10 billion – which a certain other FX blog then dismissed as “market rumors” (although they weren’t shy about copying most of our article details) – eToro itself has issued a press release confirming the details which appeared here on FNG about both the going-public transaction, and the identity of the eToro SPAC.
We’ll repost the company’s full press release on the matter below. The company also put together a neat investor presentation, summarizing the transaction and giving a lot more detail regarding eToro’s financial and operating results over the past few years – you can download the eToro SPAC investor presentation here (pdf).
eToro, the world’s leading social investment network, to become publicly traded through business combination with FinTech Acquisition Corp. V
● Company expected to have an estimated implied equity value of approximately $10.4 billion
● Global multi-asset investment platform capitalizing on secular trends: rise of digital wealth platforms, growing retail participation, and mainstream crypto adoption
● In 2020, eToro added over 5 million new registered users and generated gross revenues of $605 million
● Added over 1.2 million new registered users and executed more than 75 million trades in January 2021 alone
● Transaction includes commitments for a $650 million common share private placement from leading investors including ION Investment Group, Softbank Vision Fund 2, Third Point LLC, Fidelity Management & Research Company LLC, and Wellington Management.
● Investor call scheduled for March 16, 2021 at 8:00 AM Eastern
NEW YORK, NY, March 16, 2021 – eToro Group Ltd. (“eToro” or the “Company”), a multi-asset investment platform that empowers people to grow their knowledge and wealth as part of a global community of successful investors, and FinTech Acquisition Corp. V (NASDAQ: FTCV) (“FinTech V”), a publicly-traded special purpose acquisition company, announced today that they have entered into a definitive business combination agreement. Upon closing of the transaction, the combined company will operate as eToro Group Ltd. and is expected to be listed on NASDAQ.
eToro was founded in 2007 with the vision of opening up capital markets. The social investment network offers users a choice of which assets to invest in from commission-free fractional equities to cryptoassets, and a choice of how to invest. Users can trade directly themselves, invest in a smart portfolio, or replicate the investment strategy of successful investors on the platform at no extra cost with the simple click of a button.
In 2020, eToro added over 5 million new registered users and generated gross revenues of $605 million, representing year-over-year growth of 147%. Momentum is accelerating in 2021 as a new generation of investors discover the global markets. In 2019, monthly registrations averaged 192,000. In 2020, that grew to 440,000, and in January 2021 alone eToro added more than 1.2 million new registered users to the social network. In 2019, eToro executed 8 million trades per month on average. That number grew to 27 million in 2020, and in January 2021 alone eToro saw more than 75 million trades executed on the eToro platform.
eToro currently has over 20 million registered users and its social community is rapidly expanding due to the vast, and growing, total addressable market which is supported by secular trends such as the growth of digital wealth platforms and the rise in retail participation. eToro was also one of the first regulated platforms to offer cryptoassets and is well-positioned to benefit from mainstream crypto adoption.
“We founded eToro with the vision of opening the global market for everyone to trade and invest in a simple and transparent way. Today, eToro is the world’s leading social investment network. Our users come to eToro to invest, but also to communicate with each other; to see, follow, and automatically copy successful investors from all around the world,” stated Yoni Assia, Chief Executive Officer of eToro. “We created a new category of wealth management – social investing – and we are dominating the market as evidenced by our rapid expansion.”
Betsy Cohen, Chairman of the Board of Directors of FinTech V, said,
“As a pioneer in the evolution of SPACs, Fintech Masala, our sponsor platform, seeks out companies with outsized growth, effective controls and excellent management teams. eToro meets all three of these criteria. In the last few years, eToro has solidified its position as the leading online social trading platform outside the U.S., outlined its plans for the U.S. market, and diversified its income streams. It is now at an inflection point of growth, and we believe eToro is exceptionally positioned to capitalize on this opportunity.”
Yoni Assia, Chief Executive Officer of eToro continued,
“Today marks a momentous milestone for eToro as we embark on our journey to become a publicly traded company with Betsy Cohen and the team at FinTech V. I want to express my gratitude for the passion, hard work, drive and determination of all of the eToro team members over the past 14 years who have helped make this a reality.”
● The world’s leading social investment network with more than 20 million registered users from over 100 countries.
● A truly global multi-asset platform supporting investments in equities, ETFs, commodities, currencies, cryptoassets and smart portfolios.
● A global platform regulated in the U.K., Europe, Australia, the U.S. and Gibraltar.
● In 2019 launched crypto and social trading in the U.S.; received approval from FINRA for a broker dealer license, with plans to launch stocks in the U.S. in the second half of 2021.
● Large and growing market opportunity with secular tailwinds, including the rise of retail investor engagement with capital markets and accelerated digital transformation.
● Patented and scalable technology that enables users to communicate with each other and to copy the investment strategy of successful investors on the platform.
● Multichannel marketing strategy with high return on investment.
● Expert management team from multiple disciplines across online brokerage, technology, marketing and data sciences, with former regulators as senior advisors.
● Financial forecasts reflect the diversification and growth potential of the existing platform combined with efficient marketing and operating leverage.
Business combination highlights
The Company is expected to have an estimated implied equity value of approximately $10.4 billion at closing, reflecting an implied enterprise value for eToro of approximately $9.6 billion. The transaction includes $250 million in gross proceeds from FinTech V’s cash in trust (assuming no redemptions) and $650 million in gross proceeds from a fully committed private placement in public equity (“PIPE”) at $10.00 per share from various strategic and institutional investors, including ION Investment Group, Softbank Vision Fund 2, Third Point LLC, Fidelity Management & Research Company LLC, and Wellington Management, that will close concurrently with the business combination. The Company is expected to have approximately $800 million net cash on its balance sheet to support future growth.
Existing eToro equity holders, including current investors and employees of the firm, will remain the largest investors in the combined company retaining approximately 91% ownership immediately following the business combination (assuming no redemptions by FinTech V’s stockholders).
The business combination, which has been unanimously approved by the boards of directors of both eToro and Fintech V, is targeted to close in the third quarter of 2021, subject to stockholder approvals and other customary closing conditions.
Additional information about the business combination, including a copy of the definitive agreement and investor presentation, will be provided in a Current Report on Form 8-K to be filed by Fintech V with the Securities and Exchange Commission and available at www.sec.gov.
Goldman Sachs & Co. LLC is serving as financial advisor to eToro and Citi is serving as financial advisor to FinTech V in connection with the business combination. Skadden, Arps, Slate, Meagher & Flom LLP and Meitar | Law Offices are serving as legal advisors to eToro. Morgan, Lewis & Bockius LLP and Gornitzky & Co. are serving as legal advisors to FinTech V. Citi, Cantor Fitzgerald & Co. and Northland Capital Markets are serving as capital markets advisors to FinTech V. Goldman Sachs & Co. LLC and Citi are serving as co-placement agents on the PIPE. Davis Polk & Wardwell LLP are serving as legal advisors to the placement agents on the PIPE.
eToro is a multi-asset investment platform that empowers people to grow their knowledge and wealth as part of a global community of successful investors. eToro was founded in 2007 with the vision of opening up the global markets so that everyone can trade and invest in a simple and transparent way. Today, eToro is a global community of more than 20 million registered users who share their investment strategies; and anyone can follow the approaches of those who have been the most successful. Due to the simplicity of the platform users can easily buy, hold and sell assets, monitor their portfolio in real time, and transact whenever they want.
About FinTech Acquisition Corp. V
FinTech Acquisition Corp. V is a special purpose acquisition company led by Betsy Z. Cohen as Chairman of the Board, Daniel G. Cohen, as Chief Executive Officer and James J. McEntee, III as President formed for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, with a focus on the financial technology industry. The company raised $250,000,000 in its initial public offering in December 2020 and is listed on the NASDAQ under the symbol “FTCV”.