Almost 500 Fintech Deals Worth Approximately $70B Closed in Q1 2024, Royal Park Partners Reveals

Infrastructure
30.04.2024 02:35 pm

Royal Park Partners (RPP), the leading fintech-focused corporate advisors, have released their latest Quarterly Fintech Market Update offering an essential view of global fintech investment and M&A trends shaping the sector.

Notably, the fintech sector demonstrated continued resilience and expansion in the first months of the year. The Royal Park Partners Fintech Index[1] continued its rally of 2023 into Q1 2024, adding another 4% to its December 2023 value (and 46% higher than January 2023). This follows the recent news that fintech has bounced back as the UK’s most funded sector in Q1, having lost its crown to the energy startup sector in 2023.

The global financing (248) and M&A (240) dealcount in fintech remained healthy in the first quarter of the year. However, the total value of these deals has dropped (eg $7.8B financing in Q1 2024, compared with $14.1B in Q4 2023), highlighting continued investor caution against the backdrop of ongoing inflation and geopolitical instability.

March stocktake

The simulated RPP Fintech Index grew more than any of the other large indices in March 2024 alone vs the previous month (+5%), including FTSE100 (+4%), S&P 500 (+3%) and NASDAQ (+2%).

Insurtech stocks saw the biggest month-on-month increase at 19%, experiencing a turnaround following a renewed focus on profitability and consolidation after a challenging 2022. Quarter-on-quarter, insurtech has leapt +61%, dramatically outpacing other verticals including payments (+5%) and capital markets / wealth management tech (+4%).

Meanwhile, B2C fintech stocks continue to greatly outperform B2B stocks. B2C share price performance has grown a staggering +118% since January 2023, compared to a 25% increase across B2B stocks.

Aman Behzad, Managing Partner at Royal Park Partners said: “Royal Park Partners’ simulated Fintech Index offers an indication of how publicly listed fintech companies are faring in comparison to their peers. Despite short-term pressures, our analysis reveals that fintechs are showing consistent adaptability, and their robust performance is a testament to their resilience. Over the next quarters, we can expect to see this confidence in public markets transposing into the private markets, as investors adapt to a new paradigm with higher interest rates and inflation, and fintech continues to generate value creation opportunities.”

Investor interest for crypto and blockchain returns in private markets

The lion’s share of fintech investment was claimed by crypto and blockchain businesses, which attracted ~25% of total financing rounds in Q1. These maturing sectors continue to secure market validation, after a challenging 2022-2023 market momentum.

Banking and lending also garnered significant investment, representing 29% of the deal value in Q1 for only 18% of transactions. This was largely driven by several $100M+ rounds, including Monzo ($430M), Svatantra ($230M), SK Finance ($160M) and Flagstone ($139M).

Geographically, North America remained the dominant region, receiving around 45%+ of the total invested capital in Q1 2024, followed by Europe with ~25%.

M&A momentum

Capital One’s landmark $35.3B Discover acquisition signals a trend within the consumer finance and payments sector, as companies consolidate to streamline operations and sharpen core business focus.

Payments accounted for one in five (19.6%) of M&A transactions disclosed in Q1 2024. This wave of consolidation across payments is projected to continue, as leading players unlock economies of scale and opportunities for growth.

Wealth management/capital markets M&A deals follow in second place, accounting for 15.4% of the 240 M&A deals tracked last quarter, with a lot of interest from the strategic.