Banking, finance, and taxes

Fintech Firm eToro Set to Combine With SPAC in $10 Billion Deal

Paul Ausick

Published: March 16, 2021 9:30 am

Last Updated: March 16, 2021 9:36 am

Online stock trading platform eToro announced Tuesday that it has agreed to a business combination with FinTech Acquisition Corp. V (NASDAQ: FTCV) that implies an equity value for eToro of approximately $10.4 billion. Existing shareholders’ equity totals $9.47 billion.

eToro will receive a total of $900 million in gross proceeds, $250 million currently held in trust by FTCV and $650 million to be raised in 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, Fidelity Management & Research Company, and Wellington Management. The PIPE offering closes concurrently with the business combination.

According to the announcement, existing equity holders in eToro will retain 91% of the company’s ownership when the deal closes, currently expected sometime in the third quarter of this year.

eToro claims more than 20 million registered users, including more than 1.2 million who registered in the month of January alone. The company executed 27 million stock trades per month in 2020. In January, eToro executed more than 75 million trades.

There’s no big secret regarding the increase in trading: the short squeeze that saw retail investors chase the share price of GameStop and a handful of other stocks higher in the last half of January. While Robinhood got much of the press, eToro’s platform also figured into the trading boom.

Yoni Assia, CEO of eToro, commented: “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. We created a new category of wealth management – social investing – and we are dominating the market as evidenced by our rapid expansion.”

FTCV chair Betsy Cohen added, “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 capitalize on this opportunity.”

According to a presentation on the eToro website, 69% of its users are based in Europe, 18% in Asia/Pacific, 8% in the Americas and 5% in the Middle East and Africa.

Once the deal closes, the combined company will operate as eToro Group Ltd. and be listed on the Nasdaq.

FTCV stock traded up more than 15% in Tuesday’s premarket session at $12.29. The stock closed at $10.66 on Monday. The SPAC came public in December.