Chances are low that Plaid will look for another merger partner now that the $ 5.3 billion sale of Visa has been discontinued.
Instead, fintech is more likely to go public through a traditional initial public offering, special purpose acquisition or direct listing, said five fintech bankers and venture capitalists. To Barron.
“Plaid is likely to get an IPO or get SPAC’D,” said one venture capitalist.
“This is the city of SPAC,” added another banker.
A Plaid spokeswoman declined to comment.
SPAC has emerged as the busiest sector in the IPO market. There were 248 so-called blank companies that went public in 2020 – more than half of all initial public offerings this year – raising $ 82.3 billion, Dealogic said. $ 82.3 billion is nearly 50% of the $ 167.4 billion raised from the entire IPO market in 2020.
Companies with empty controls were aggressive with fintech. Earlier this month,
Social capital Hedosofia
(ticker: IPOE), the latest blank checks company by venture capitalist Chamath Palihapitiya, has agreed to merge with online personal finance company Social Finance or SoFi in a $ 8.6 billion deal.
Foley Trasimene Acquisition Corp. II
(BFT), SPAC of William P. Foley II, bought the Paysafe payment platform for $ 9 billion in December. United Wholesale Mortgage, a leading mortgagor, is merging with Gores Holdings IV (GHIV), a non-cash check company from the Gores Group, in a $ 16.1 billion deal. The consolidated wholesale trade is scheduled to trade on the New York Stock Exchange later this month.
Founded in 2013, the Plaid platform allows users to link their bank accounts for application financing and money transfers. For example, Plaid technology allows Venmo customers to pay their friends and family. Plaid works with other well-known fintechs, including the Robinhood investment platform; Transferwise, which offers international money transfers; and Coinbase, a digital currency exchange. It employs 600 people.
Fintech in San Francisco has raised $ 310 million in funding. That includes a range of $ 2.8 million for seeds in 2013 and $ 12.5 million in 2014, Crunchbase said. Both Visa (V) and
(MA) is investing in the Plaid Round for $ 250 million in the 2018 C-Series.
“It will be difficult for Plaid investors to wait too long to exit, given how close they are,” said a second banker, citing a close sale of Visa.
A Plaid spokeswoman said her investors “are determined to support Plaid’s path as an independent company and our long-term growth trajectory.”
Visa agreed in January 2020 to buy Plaid for $ 5.3 billion. The deal, which did not include a dissolution fee, would be Visa’s largest to date. The companies agreed late Tuesday to end the $ 5.3 billion transaction after the Justice Department filed a lawsuit to block the deal. DOJ claims the acquisition will allow Visa to eliminate the competitive threat to its online debit business before Plaid has a chance to succeed. “Now that Visa has abandoned its anti-competitive merger, Plaid and other future fintech innovators are free to develop potential alternatives to Visa’s online debit services,” Assistant Attorney General Makan Delrahim said in a statement.
In a separate statement, Visa said it was confident it would win the lawsuit. But the pace of the multi-year review of regulators “was not compatible with the fast-moving start-up realities – and a delay of nearly one or more years is not in the best interests of our customers, the financial system or consumers themselves,” said Zack Perret and CEO of Plaid, in a blog post.
Plaid’s customer base has grown by 60% in the last year as more people have become digital, a spokesman said. The Covid-19 pandemic has made many consumers no longer want to use money or physically enter bank branches. Plaid is focused on “building [its] products and continues to adjust the generous growth potential that exists for Plaid as digital funding becomes more widespread, ”she said.
DOJ’s lawsuit against Visa is the latest sign that regulators are concerned about the power held by Silicon Valley giants such as
(GOOG). In particular, Facebook has been widely criticized for allowing the dissemination of misinformation on its site, which allegedly contributed to the attack on the US Capitol last week.
“I’m not surprised they shook it,” said Matthew Epstein, managing partner and founder of Newbold Partners, a fintech-focused boutique investment bank, at the Visa-Plaid merger. Regulators are concerned that large technology companies are buying emerging new suppliers at the beginning of their life cycle, Epstein said.
“The consensus in Washington is that antitrust rules are not being enforced enough and that this is creating problems,” Epstein said. “The change in administrations will not change [the scrutiny]. Visa may have decided that this is a situation where they cannot fight the mayor’s office. “
Write to Louisa Beltran at email@example.com