Social trading platform eToro to merge with FinTech V in $10.4bn deal


Social trading platform eToro to go public via a $10.4bn merger deal with a SPAC. (Credit: Csaba Nagy from Pixabay)

Israeli social trading platform eToro Group has agreed to merge with FinTech Acquisition Corp. V (FinTech V), in a deal that values the combined company at around $10.4bn.

FinTech Acquisition is a publicly-traded special purpose acquisition company (SPAC).

Following the closing of the merger, the combined firm will operate as eToro Group and is likely to have a listing on NASDAQ.

Established in 2007, eToro is a multi-asset investment platform that supports investments in equities, exchange-traded funds (ETFs), currencies, commodities, cryptoassets, and smart portfolios.

Users also get a choice of how to invest through eToro’s social trading platform, which is regulated in the UK, the US, Europe, Australia, and Gibraltar.

With the click of a button, users can directly trade themselves, make investments in a smart portfolio, or replicate the investment strategy of successful investors on eToro without any extra cost.

The company is claimed to have added more than five million new registered users in 2020. Its revenues for 2020 were $605m, which is a year-over-year growth of 147%.

Currently, eToro claims to have more than 20 million registered users.

In 2019, the company launched crypto and social trading in the US.

EToro CEO Yoni Assia said: “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.”

The deal provides the combined company with nearly $800m in cash proceeds. This includes $250m from FinTech V’s cash in trust and $650m through a private investment in public equity (PIPE) at $10 per share.

The PIPE investors include ION Investment Group, Third Point, Softbank Vision Fund 2, Wellington Management, and Fidelity Management & Research.

EToro’s existing equity holders, which include current investors and the firm’s employees, will hold a stake of around 91% in the combined company.

FinTech V board of directors chairman Betsy Cohen 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 capitalise on this opportunity.”

The merger deal, which is subject to shareholders’ approvals and other customary closing conditions, is expected to close in Q3 2021.