Israel-based eToro, a social trading and investment marketplace, has announced that it will be going public through a merger with special purpose acquisition company (SPAC) FinTech Acquisition Corp. V.
The merger is expected to close in the third quarter and is expected to be listed on NASDAQ. With this development, eToro is expected to have an estimated implied equity value of about $10.4B (approx €8.73B).
Speaking about the development, Yoni Assia, CEO of eToro says, “Today marks a momentous milestone for eToro as we embark on our journey to become a publicly-traded company with Betsy Cohen and the team at FinTech V. I want to express my gratitude for the passion, hard work, drive and determination of all of the eToro team members over the past 14 years who have helped make this a reality.”
About eToro
eToro was founded in 2007 by David Ring, Ronen Assia, and Yoni Assia, with the vision of opening up the global markets so that anyone can trade and invest in a simple and transparent way.
The eToro Group consists of the eToro platform, multi-asset trading and investment venue, crypto wallet, and on-chain crypto exchange. The social investment network offers users a choice of which assets to invest in from commission-free fractional equities to crypto-assets 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.
The company’s product, OpenBook and WebTrader, allows traders to learn from each other, share live trading information, and capitalise on their collective power. eToro has registered offices in Israel, China, Australia, Russia, Cyprus, the UK, and more.
How eToro got ready to go public?
In 2020, eToro added over 5 million new registered users and generated gross revenues of $605M (approx €508.4M), a 147 per cent jump from a year earlier.
Better still, eToro’s growth is accelerating. In 2019, the monthly registrations that averaged 192,000 grew in 2020 to 440,000, and in January 2021 alone eToro added more than 1.2 million new registered users to the social network.
Back in 2019, eToro executed an average of 8 million trades per month on its platform which grew to 27 million in 2020. And, in January 2021 alone, the company saw more than 75 million trades executed on its 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.
Betsy Cohen, Chairman of the Board of Directors of FinTech V, says, “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.”
Transaction overview
According to a statement from eToro, it is expecting to have an equity value of about $10.4B (approx €8.73B) at closing, reflecting an implied enterprise value for eToro of approx $9.6B (approx €8B).
The transaction includes $250M (approx €210M) in gross proceeds from FinTech V’s cash in trust (assuming no redemptions) and $650M (approx €546.19M) in gross proceeds from private placement in public equity (“PIPE”) at $10 (approx €8.40) 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.
The company is also expected to have around $800M (approx €672.24M) 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 approx 91 per cent ownership immediately following the business combination (assuming no redemptions by FinTech V’s stockholders).
About FinTech Acquisition Corp. V
FinTech Acquisition Corp. V is a special purpose acquisition company (SPAC) led by Betsy Z Cohen as Chairman of the Board, Daniel G Cohen, as CEO and James J McEntee, III as President.
The company is formed for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganisation, or similar business combination with one or more businesses, with a focus on the financial technology industry.
The company raised $250M (approx €210M) in its initial public offering in December 2020 and is listed on the NASDAQ under the symbol “FTCV”.
Shares of FinTech Acquisition Corp. V grew 43 per cent on Tuesday after it announced its plans to merge with eToro.