Dec 26, 2023

2023: Top five mergers and acquisitions 26th December 2023 As the year comes swiftly to an end, FinTech Futures takes a look back at some of the biggest mergers and acquisitions (M&A) to grace the world fintech stage during 2023. HSBC snaps up Silicon Valley Bank UK for £1 HSBC steps in to buy Silicon Valley Bank UK for £1 Although definitely not one of the largest deals to be struck this year in terms of value, HSBC’s acquisition of Silicon Valley Bank’s UK arm certainly hit the headlines. With the backing of HM Treasury, HSBC stepped forward to acquire the firm only days after its parent company, Silicon Valley Bank, was shuttered by US regulators, marking the largest failure of a US bank since 2008. SVB UK was eventually folded into HSBC Innovation Banking, which launched in June. Elsewhere, First Citizens Bank went in to snap up all the remaining loans and other assets of Silicon Valley Bridge Bank, while hedge fund firm The Baupost Group leveraged its funds to support a group led by Jeff Leerink, SVB Securities’ CEO and founder, to buy the investment banking business from SVB Financial Group. JP Morgan Chase buys First Republic from FDIC in $10.6bn deal As was a running theme throughout the first half of this year with the likes of SVB and Signature Bank , the market was full of banks needing buyers. One of those banks was First Republic, a commercial bank based in San Francisco, US. In March, it was discovered by Fitch Ratings and S&P Global Ratings that the bank was at serious risk of incurring a bank run, as it had lent out more than it had in deposits, with a shortfall of $13.5 billion. First Republic’s assets were seized by the Federal Deposit Insurance Corporation (FDIC) in May, which passed the assets on to the highest bidder – US multinational JP Morgan Chase. The bank took on all of First Republic’s deposits – insured and uninsured – worth approximately $92 billion, including $30 billion of large bank deposits. First Republic was ultimately phased into JP Morgan Chase’s operations, most notably into its private wealth management and banking business. The transaction valued Worldpay at $18.5 billion FIS signed a definitive agreement with US-based private equity firm GTCR to sell a majority stake in its Worldpay merchant business back in July. GTCR acquired 55% of Worldpay, with FIS set to receive $11.7 billion in upfront net proceeds. FIS retained a non-controlling 45% ownership interest in the firm. The deal valued Worldpay at $18.5 billion, including $1 billion of consideration contingent on the returns realised by GTCR exceeding certain thresholds. FIS bought Worldpay in 2019 for $43 billion. GTCR committed an additional equity capital investment in Worldpay of up to $1.25 billion as part of the agreement to pursue inorganic growth opportunities. Sixth Street-led consortium snaps up Goldman Sachs’ GreenSky Marking the epitome of its ongoing retreat from the retail banking space, Goldman Sachs brought to an end one of the most highly-anticipated sales of the year when it sold GreenSky to a consortium of institutional investors led by San Francisco-based investment firm Sixth Street in October. The purchase came just six months after the bank first indicated its intention to part ways with the fintech lender and buy now, pay later (BNPL) provider it acquired for $2.24 billion in September 2021. Although the exact value of the transaction was not disclosed, Sixth Street CEO Alan Waxman indicated a strong intention to continue the company’s legacy of “driving growth through enhanced technology and great user experiences”. Waxman also revealed that the firm’s co-founder, Michael Muscolino, and its head of asset-based finance, Michael Dryden, have united a group of “strategic partners” with the goal of placing GreenSky in “the best position to succeed going forward”. Visa acquires Pismo for $1 billion Payments giant Visa agreed to acquire Brazilian issuer processor and core banking platform Pismo for $1 billion in cash back in June. With the acquisition, Visa says it will be able to provide core banking and issuer processing capabilities across debit, prepaid, credit and commercial cards for customers via cloud-native APIs. Pismo’s platform will also enable Visa to provide support and connectivity for emerging payment rails (such as Pix in Brazil) for financial institutions. “Through the acquisition of Pismo, Visa can better serve our financial institution and fintech clients with more differentiated core banking and issuer solutions they can offer their customers,” said Jack Forestell, chief product and strategy officer at Visa.