Israel's eToro to go public in $10.4 billion merger deal
26 March 2021
eToro Group Ltd, a multi-asset investment platform and FinTech Acquisition Corp V, a publicly-traded special purpose acquisition company, on Tuesday entered into a a $10.4 billion merger agreement that will see eToro becoming a publicly traded company.
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 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. It 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 pr cent 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.
Upon closing of the transaction, the combined company will operate as eToro Group Ltd and is expected to be listed on Nasdaq.
Founded in 2007 with the vision of opening up capital markets, eToro empowers people to grow their knowledge and wealth as part of a global community of successful investors. 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 per cent. 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.”
“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 US, outlined its plans for the US market, and diversified its income streams. It is now at an inflection point of growth, and we believe eToro is exceptionally positioned to capitalise on this opportunity,” Betsy Cohen, chairman of the board of directors of FinTech V, said.
eToro is 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, eToro is being regulated in the UK, Europe, Australia, the US and Gibraltar.
In 2019 eToro launched crypto and social trading in the US; received approval from FINRA for a broker dealer licence, with plans to launch stocks in the US in the second half of 2021.
eToro offers large and growing market opportunity with secular tailwinds, including the rise of retail investor engagement with capital markets and accelerated digital transformation.
The platform uses a patented and scalable technology that enables users to communicate with each other and to copy the investment strategy of successful investors.
Besides multichannel marketing strategy with high return on investment, eToro is backed by an expert management team from multiple disciplines across online brokerage, technology, marketing and data sciences, with former regulators as senior advisors.