A NASDAQ-listed SPAC, FinTech Acquisition Corp (FTCV) has been used to take CFD and forex broker eToro public on the NASDAQ. The deal is being touted as a “business combination agreement” by eToro, but essentially provides the broker with a well-trodden and economic path to a full listing on one of the premier US exchanges.
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.
Brokerage has seen phenomenal growth during pandemic
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 its 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 has been keen in recent years to portray itself more as a social investment network than a bread and butter brokerage. The firm is currently regulated in the UK, US, Australia and Gibraltar. In 2019 it launched crypto and social trading in the US, and received approval from FINRA for a broker dealer license.
eToro 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.
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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.
Deal expected to close Q3
eToro 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.
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.