Israeli multi-asset investment platform eToro has merged with publicly traded special purpose acquisition company (Spac) Fintech Acquisition Corp V (Fintech V).
Upon closing, the combined company will operate as eToro Group and is expected to list on the Nasdaq.
The platform supports investments in equities, ETFs, commodities, currencies, cryptoassets and smart portfolios.
EToro was founded in 2007 with the aim to open up capital markets. Users can trade directly, invest in a smart portfolio, or replicate the investment strategy of successful investors on the platform.
It is regulated in the UK, Europe, Australia, the US and Gibraltar.
In 2019, eToro launched crypto and social trading in the US and received approval for a broker-dealer licence, with plans to launch stocks in the country in the second half of 2021.
Finances
The combined business is expected to have an “estimated implied equity value” of approximately $10.4bn (£7.5bn, €8.7bn) at closing, reflecting an “implied enterprise value” for eToro of approximately $9.6bn.
The deal includes $250m in gross proceeds from Fintech V’s cash and $650m in gross proceeds from a private placement in public equity at $10 per share from various strategic and institutional investors.
EToro Group is expected to have approximately $800m 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 approximately 91% ownership immediately following the business merger.
The business combination, which has been unanimously approved by the boards of directors of both eToro and Fintech V, is targeted to close in the third quarter of 2021, subject to stockholder approvals and other customary closing conditions.
‘New category of wealth management’
Yoni Assia, chief executive of eToro, 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.
“We created a new category of wealth management – social investing – and we are dominating the market as evidenced by our rapid expansion.”
Betsy Cohen, chairman of the board of directors of Fintech V, added: “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.”
